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

(In the Senate - Filed March 9, 2023; March 9, 2023, read first time and referred to Committee on Business & Commerce; April 4, 2023, reported adversely, with favorable Committee Substitute by the following vote: Yeas 8, Nays 0, three present not voting; April 4, 2023, sent to printer.) Click here to see the committee vote

COMMITTEE SUBSTITUTE FOR S.B. No. 6 By: Schwertner

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 an entity operating under Section 39.360 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) an entity operating under Section 39.360; 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 an entity operating under Section 39.360.

(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 gas-fueled generation asset with on-site fuel storage that is located in the ERCOT power region 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" means the program established 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 an entity operating under Section 39.360.

(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 an entity operating under Section 39.360 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) an entity operating under Section 39.360.

SECTION 1.06. Section 35.004, Utilities Code, is amended by amending Subsections (b) and (c) and adding Subsection (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, entities operating under Section 39.360, 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. An entity operating under Section 39.360 is not a third party for the purposes of this subsection.

(i) Services provided by reliability assets when dispatched 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), (f), (g), and (h) 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, an entity operating under Section 39.360, 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 electric utilities to ensure that each reliability asset is fully interconnected in the ERCOT power region not later than the date the reliability asset is ready for commercial operation. The independent organization certified under Section 39.151 for the ERCOT power region shall give priority to interconnecting each reliability asset. An electric utility that enters into an interconnection agreement for a reliability asset shall give priority to interconnecting the reliability asset and complete construction of any facilities necessary to interconnect the reliability asset not later than the date the reliability asset is ready for commercial operation.

(e) 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 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.

(f) The commission may extend the deadline established by Subsection (d) after notice, hearing, and a determination on a showing of good cause that fully interconnecting the reliability asset before the deadline is not feasible.

(g) A transmission facility constructed to interconnect a reliability asset, as described by Subsection (d), is considered to be necessary for the service, accommodation, convenience, or safety of the public for the purposes of Chapter 37.

(h) The commission shall permit an electric utility that constructs and operates interconnecting facilities for a reliability asset to recover the reasonable and necessary costs incurred to interconnect the reliability asset.

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. PROGRAM RATES. (a) If sufficient funding for the Texas Energy Insurance Program is not available from state money, the commission shall set a nonbypassable rate that must be charged by transmission and distribution utilities, municipally owned utilities, and electric cooperatives in the ERCOT power region to provide funding for the Texas Energy Insurance Program. The transmission and distribution utilities, municipally owned utilities, and electric cooperatives shall:

(1) charge the nonbypassable rate to their respective customers or, as appropriate, bill the customer's retail electric provider; and

(2) remit to the independent organization certified under Section 39.151 for the ERCOT power region each month the rate revenue received under Subdivision (1).

(b) The independent organization certified under Section 39.151 for the ERCOT power region shall remit the rate revenue received under Subsection (a)(2) to the comptroller.

(c) The nonbypassable rate required by Subsection (a) must be based on all reliability asset rates approved under this section.

(d) The commission shall set just and reasonable rates for each entity operating under Section 39.360 for constructing, owning, operating, and maintaining reliability assets. The rates must:

(1) except as provided by Subdivision (2), be based on the entity's just and reasonable costs of providing service, including variable costs, allowance for funds used during construction, and all costs of constructing, owning, operating, and maintaining reliability assets, subject to:

(A) the rate of return on equity accepted by the entity under Section 39.360(h)(1); and

(B) the total cost of reliability assets accepted by the entity under Section 39.360(h)(2); and

(2) ensure that a certified entity does not receive more than $100 million per year in revenue per gigawatt of installed generation capacity operated by the entity in the program.

(e) In addition to the considerations required by Subsection (d), the commission shall consider the following parameters when setting reliability asset rates for a certified entity:

(1) the entity's capital financing structure, including:

(A) the capital financing structure of any corporation owned by or affiliated with the entity; and

(B) the entity's debt-to-equity ratio, including any debt of the corporate parent that is used to fund any part of the entity's equity;

(2) a 40-year depreciable life;

(3) allowance for funds used during construction;

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

(5) reasonably incurred attorney's fees; and

(6) 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.

(f) Not later than the 185th day after the date a certified entity submits to the commission a rate request for a reliability asset, the commission shall set the reliability asset rate. The commission shall incorporate the approved rate into the commission's calculations of the nonbypassable rate under Subsection (a) and require the newly calculated nonbypassable rate to be collected beginning on the date the reliability asset is commissioned.

(g) The comptroller shall disburse in monthly amounts determined by the commission to each certified entity for which the commission has set a reliability asset rate under this section the rate revenue to which the certified entity is entitled.

(h) Not later than the 185th 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 if the commission determines those costs were prudently incurred; and

(2) in collaboration with the independent organization certified under Section 39.151 for the ERCOT power region, reconcile any over-collections or under-collections.

(i) The commission shall adjust the rates 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. The adjustment must be based on an annual filing by the certified entity that shows the actual costs the entity incurred over the preceding year. The commission shall apply any market revenues earned by the certified entity for the operation of the reliability asset under Section 38.079 in the prior year as an offset to the rates. The review for a rate adjustment under this subsection is limited to verifying the accuracy of the incurred costs, the reconciliation of any over-collections or under-collections, and the calculation of the rates. A certified entity is not entitled to recover more than $10 million per year for a single capital cost unless the commission approves the cost before the entity incurs the cost.

Sec. 36.502. STRANDED COST RECOVERY. The commission by rule shall establish a process to allow certified entities in the Texas Energy Insurance Program to recover stranded costs if the Texas Energy Insurance Program is repealed or lacks sufficient funding.

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. (a) Reliability assets may be dispatched by the independent organization certified under Section 39.151 for the ERCOT power region in a manner that minimizes wholesale electric market effects. Dispatch may occur:

(1) when the independent organization determines that without generation by a regional reliability asset, an overload of a transmission system element will result in load shed for that region;

(2) when the independent organization determines that the operation of a reliability asset is needed to resolve an actual or anticipated violation of transmission security criteria;

(3) as a last resort to avoid ordering involuntary load shedding; and

(4) for not more than 336 hours per year for testing purposes and as directed by the independent organization.

(b) The commission shall require the independent organization to:

(1) develop deployment criteria and protocols for reliability assets, including a maximum notice time for deployment, minimum run times, and other operational requirements needed to support reliability; and

(2) allow the state to collect revenue under Section 36.501(b) but ensure that reliability assets do not participate in the day-ahead or real-time ERCOT markets.

(c) The commission shall address long-term resource adequacy and investment in the wholesale electric market in conjunction with implementation of the Texas Energy Insurance Program.

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 an entity operating under Section 39.360, 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 constraints that could affect the availability of any reliability asset and include alternatives for meeting identified needs.

(e) Entities operating under Section 39.360 are 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 participants in 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 two applications from qualified applicants in response to the request described by Subdivision (1) before the expiration of the period provided by Subsection (e), select and certify at least two qualified applicants not later than the 90th 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 generation capacity by region.

(e) An applicant must submit an application under Subsection (c) not later than the 60th day after the date the commission issues a request for proposals under that subsection.

(f) An entity that is prohibited by this title from owning or operating 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 and expertise by demonstrating that:

(A) the applicant or the applicant's parent company or operating partner has an investment grade credit rating; and

(B) the applicant or the applicant's parent company or operating partner is able to fund the investment as demonstrated by proof of access to adequate financing;

(2) establish industry expertise by demonstrating that the applicant is a river authority that owns or operates generation facilities, an electric utility, a municipally owned utility, or an electric cooperative, or the applicant or the applicant's parent company owns or operates electric generation assets totaling at least 2,500 megawatts;

(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 weatherized, capable of starting up and generating electricity without requiring outside power or support from the grid, and in operation not later than the last day of the 48th month after certification, unless interconnection delays require a later operation date; and

(4) pledge:

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

(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 without prior approval of the commission.

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

(1) agreeing to a rate of return on equity the applicant will accept while operating as part of the Texas Energy Insurance Program, which may not exceed 10 percent;

(2) of the total cost of reliability assets for which the applicant will request recovery under Subchapter K, Chapter 36, while operating as part of the Texas Energy Insurance Program, which may not exceed $1 billion per gigawatt of installed generation capacity operated in the program; and

(3) agreeing to the rates and revenues authorized under Subchapter K, Chapter 36.

(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 resources to allow the provision of generation at full load for at least 168 continuous hours or the maximum number of continuous hours authorized for continuous operation under permits issued under state and federal law;

(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 at full output 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;

(7) proof that the applicant or the applicant's parent company or operating partner meets the requirements of Subsection (g)(1); and

(8) proof that the applicant can follow telemetry from the independent organization certified under Section 39.151 for the ERCOT power region.

(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 that the certified entity:

(1) failed to dispatch sufficient energy from reliability assets when called upon by the independent organization certified under Section 39.151 for the ERCOT power region or the commission and the failure cannot be excused by factors outside the entity's control;

(2) has not fulfilled commitments made in the entity's application or complied with statutory or regulatory requirements of being certified, after reasonable notice from the commission; or

(3) no longer meets the eligibility requirements for participating in the Texas Energy Insurance Program, unless the entity has presented an actionable plan acceptable to the commission to meet the requirements.

(l) Each certified entity shall comply with the commissioning requirements and 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 to the extent that the inability to provide service is the result of:

(1) the actions of a transmission service provider related to transmission service; or

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

(n) 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. If the parent performance guarantee for a reliability asset is exhausted, the commission may decertify the certified entity to operate the asset. The commission may consult with the Legislative Budget Board in implementing this subsection.

(o) A certification issued under this section may be transferred only with the prior approval of the commission. Before transferring ownership of a reliability asset to another entity, a certified entity must apply to the commission for permission to transfer the asset. The commission may not approve the transfer of a reliability asset that is sold unless the sale is conditioned on the purchaser owning, operating, and maintaining the asset for the duration of the commitment made under Subsection (i)(3). A transfer of a reliability asset under this subsection does not affect the participation of the asset in the Texas Energy Insurance Program. If the commission does not approve the transfer and the entity sells the asset, the commission shall decertify the entity to operate that asset as part of the Texas Energy Insurance Program.

(p) On the request of a certified entity, after the 40th anniversary of the commissioning date of a reliability asset, the commission shall decertify the entity to operate the asset as a reliability asset and allow the entity to apply to operate the asset in the competitive market.

SECTION 1.14. Section 382.05155, Health and Safety Code, is amended by adding Subsection (b-1) to read as follows:

(b-1) A permit for a reliability asset, as defined by Section 31.002, Utilities Code, is considered to benefit the economy of this state for the purposes of Subsection (b).

SECTION 1.15. Not later than February 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 1.16. The Public Utility Commission of Texas shall adopt any rules necessary to implement this article not later than December 1, 2023.

SECTION 1.17. 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 1.18. 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.

(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 appropriated, credited, 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 that the legislature by statute dedicates for deposit to the credit of the fund;

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

(4) gifts, grants, and donations contributed to 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;

(4) quality of management;

(5) proposed improvement in availability of the generation facility for which the loan is requested; and

(6) previous Texas energy insurance fund loan history, with a preference toward entities that have not applied for or been granted a loan previously.

(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) compliance with weatherization standards adopted after December 1, 2023;

(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) A loan provided under this chapter may not bear an interest rate of more than zero percent.

(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, at zero percent interest, 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 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 and comingled with other investments.

(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) In managing the assets of the fund, 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 reasonable expenses of managing the fund's assets shall be paid from 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.

(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.

Sec. 34.0107. RECEIVERSHIP OF DEFAULT GENERATING FACILITY. (a) In this section, "default" means:

(1) default in payment of the principal of or interest on a loan; or

(2) a failure to perform any of the terms of a loan.

(b) The state, including the commission, the advisory committee, and the trust company, may not retain an ownership interest in a project or facility for which a loan is provided under this chapter.

(c) In the event of a default on a loan made under this chapter, at the request of the commission, the attorney general shall bring suit in a district court in Travis County for the appointment of a receiver to collect the assets and carry on the business of a loan recipient if the action is necessary to cure a default by the recipient.

(d) The court shall vest a receiver appointed by the court with any power or duty the court finds necessary to cure the default, including the power or duty to:

(1) perform audits;

(2) direct ongoing operation of the assets;

(3) fund reserve accounts;

(4) make payments of the principal of or interest on bonds, securities, or other obligations; and

(5) take any other action necessary to prevent or to remedy the default, including the sale of assets.

(e) The receiver shall execute a bond in an amount to be set by the court to ensure the proper performance of the receiver's duties.

(f) After appointment and execution of bond, the receiver shall take possession of the books, records, accounts, and assets of the defaulting loan recipient specified by the court. Until discharged by the court, the receiver shall perform the duties that the court directs and shall strictly observe the final order involved.

(g) On a showing of good cause by the defaulting loan recipient, the court may dissolve the receivership.

Sec. 34.0108. TEXAS ENERGY INSURANCE FUND ADVISORY COMMITTEE. (a) The advisory committee is composed of the following six members:

(1) 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

(2) 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) A member of the advisory committee serves at the will of the person who appointed the member.

(c) 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.

(d) 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.

(e) 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.

(f) 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.

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

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

(i) 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. 34.0109. 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. 34.0110. TEXAS ENERGY INSURANCE PROGRAM CUSTOMER PAYMENTS. (a) The commission may use any money appropriated to the commission for the purpose of offsetting amounts owed to certified entities under Section 36.501 on behalf of customers of transmission and distribution utilities, municipally owned utilities, and electric cooperatives. The commission may use without legislative appropriation money from the fund for that purpose.

(b) The comptroller shall deposit revenue received under Section 36.501(b) to the credit of the fund.

(c) Money obtained by the independent organization certified under Section 39.151 for the ERCOT power region or the commission through drawing upon a parent performance guarantee as described by Section 39.360(g)(3) must be deposited to the credit of the fund.

(d) The comptroller shall make the disbursements required by Section 36.501(g) from the fund.

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.

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