By: King S.B. No. 1075

A BILL TO BE ENTITLED

AN ACT

relating to facilities and construction machinery used to respond to power outages.

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

SECTION 1. Section 39.918, Utilities Code, is amended to read as follows:

Sec. 39.918. UTILITY FACILITIES FOR RESPONDING TO SIGNIFICANT [POWER RESTORATION AFTER WIDESPREAD] POWER OUTAGE. (a) In this section, "significant ["widespread] power outage" means an event that [results in]:

(1) results in a loss of electric power that:

(A) affects a significant number of distribution customers of a transmission and distribution utility[;] and

[(B)] has lasted or is expected to last for at least six [eight] hours;

(B) affects distribution customers of a transmission and distribution utility in an area for which the governor has issued a disaster or emergency declaration;

(C) affects distribution customers served by a radial transmission or distribution facility, creates a risk to public health or safety, and has lasted or is expected to last for at least 12 hours; or

(D) creates [and

[(2)] a risk to public health or safety because it affects a critical infrastructure facility that serves the public such as a hospital, health care facility, law enforcement facility, fire station, or water or wastewater facility; or

(2) causes the independent system operator to order a transmission and distribution utility to shed load.

(a-1) The Texas Division of Emergency Management, the independent organization certified under Section 39.151 for the ERCOT power region, or the executive director of the commission may determine that a power outage other than an outage described by Subsection (a) is a significant power outage for the purposes of this section.

(a-2) A transmission and distribution utility is entitled to determine whether a loss of electric power described by Subsection (a)(1)(C) creates a risk to public health or safety for the purposes of determining whether the loss event is a significant power outage.

(b) Notwithstanding any other provision of this subtitle, a transmission and distribution utility may:

(1) lease and operate facilities that provide temporary emergency electric energy to aid in restoring power to the utility's distribution customers during a significant [widespread] power outage [in which:

[(A) the independent system operator has ordered the utility to shed load; or

[(B) the utility's distribution facilities are not being fully served by the bulk power system under normal operations]; and

(2) procure, own, and operate, or enter into a cooperative agreement with other transmission and distribution utilities to procure, own, and operate jointly, transmission and distribution facilities that have a lead time of at least six months and would aid in restoring power to the utility's distribution customers following a significant [widespread] power outage.

(b-1) In this section, long lead time facilities described by Subsection (b) may not be electric energy storage equipment or facilities described by [under] Chapter 35[, Utilities Code].

(b-2) An affiliate of a transmission and distribution utility:

(1) may own temporary emergency electric energy facilities described by Subsection (b)(1);

(2) may lease to the utility temporary emergency electric energy facilities described by Subsection (b)(1) if the costs of the lease comply with the requirements of Section 36.058;

(3) is not considered to be a power generation company for the purposes of this title or the commission's rules based solely on the ownership of and leasing to the utility temporary emergency electric energy facilities described by Subsection (b)(1);

(4) is considered to be a competitive affiliate for the purposes of this title and the commission's rules if the affiliate engages in the business of owning and leasing to unaffiliated third parties temporary emergency electric energy facilities described by Subsection (b)(1); and

(5) is considered to be a competitive affiliate only for the purposes of Section 36.058 if:

(A) the affiliate engages solely in the business of owning and leasing to the utility temporary emergency electric energy facilities described by Subsection (b)(1); and

(B) the utility demonstrates that the cost of leasing temporary emergency electric energy facilities described by Subsection (b)(1) from the affiliate provides benefits to ratepayers equal to or greater than would have been achieved by leasing the facilities from an unaffiliated third party.

(c) A transmission and distribution utility that [leases and] operates a facility [facilities] under Subsection (b)(1) may not sell electric energy or ancillary services from the facility [those facilities]. As soon as reasonably practicable after the utility deploys the facility, the utility shall provide written notice to the commission and a written market notice to advise competitive market participants of the details of the deployment. Not later than the fifth business day after the date the deployment ends, the utility shall file a report, in a form approved by the commission, providing the details of the deployment, including the start and end times of the deployment, the number of kilowatts or megawatts deployed, the number of facilities used, the locations of the facilities, and any other information required by the commission.

(d) A facility [Facilities] described by Subsection (b)(1):

(1) must be operated in isolation from the bulk power system; and

(2) may not be included in independent system operator:

(A) locational marginal pricing calculations;

(B) pricing; or

(C) reliability models.

(e) A transmission and distribution utility that [leases and] operates a facility [facilities] under Subsection (b)(1) shall ensure, to the extent reasonably practicable, that retail customer usage during operation of the facility [those facilities] is adjusted out of the usage reported for billing purposes by the retail customer's retail electric provider.

(f) A transmission and distribution utility that decides to lease a facility under Subsection (b)(1) shall, when reasonably practicable, solicit [use a] competitive bids and consider any bids received before leasing the facility [bidding process to lease facilities under Subsection (b)(1)].

(g) A transmission and distribution utility that leases and operates facilities under Subsection (b)(1) or that procures, owns, and operates facilities under Subsection (b)(2) shall include in the utility's emergency operations plan filed with the commission, as described by Section 186.007, a detailed plan on the utility's use of those facilities.

(h) The commission shall allow [permit]:

(1) a transmission and distribution utility that leases and operates facilities under Subsection (b)(1) to recover the reasonable and necessary costs of leasing and operating the facilities, including the present value of future payments required under a [the] lease, using the rate of return on investment established in the commission's final order in the utility's most recent base rate proceeding; and

(2) a transmission and distribution utility that procures, owns, and operates facilities under Subsection (b)(2) to recover the reasonable and necessary costs of procuring, owning, and operating the facilities, using the rate of return on investment established in the commission's final order in the utility's most recent base rate proceeding.

(i) The commission shall authorize a transmission and distribution utility to defer for recovery in a future ratemaking proceeding the incremental operations and maintenance expenses and the return, not otherwise recovered in a rate proceeding, associated with the leasing or procurement, ownership, and operation of the facilities.

(j) A transmission and distribution utility may request recovery of the reasonable and necessary costs of leasing or procuring, owning, and operating facilities under this section, including any deferred expenses, through a proceeding under Section 36.210 or in another ratemaking proceeding. The commission may review costs recovered through a proceeding under Section 36.210 in the following base rate proceeding and order refunds to customers if appropriate.

(k) A transmission and distribution utility requesting cost recovery under Subsection (j) is entitled to select whether the costs are considered to be distribution substation equipment costs or distribution transformer costs unless the commission has found in a previous base rate proceeding for the utility that temporary emergency electric energy costs should be categorized in a different manner. The costs may not be treated as transmission costs. A lease under Subsection (b)(1) must be treated as a capital lease or finance lease for ratemaking purposes.

(l) The fact that the commission has not previously approved a facility operated under this section or a cost of leasing, procuring, owning, or operating a facility under this section is not grounds for dismissal of the facility or the cost from a proceeding under Section 36.210 or another ratemaking proceeding.

(m) Each transmission and distribution utility that leases and operates a facility under Subsection (b)(1) shall:

(1) assess every four years the total capacity of facilities needed to aid in restoring power during a significant power outage, considering:

(A) the presence and frequency of extreme weather conditions, including hurricanes, tornadoes, high winds, lightning, flooding, icing, and freezes, in all or a portion of the utility's certificated service area;

(B) the utility's current and planned system hardening efforts;

(C) the utility's current and planned vegetation management efforts;

(D) the utility's current and planned expenditures on traditional distribution facilities;

(E) the utility's current and planned expenditures on automation of its distribution system;

(F) the utility's allocated load shed obligation based on historical seasonal peak demand, as determined by the independent system operator;

(G) the presence or number of communities that are remotely located or served radially in the utility's certificated service area;

(H) the number or location of critical infrastructure facilities that serve the public such as hospitals, health care facilities, law enforcement facilities, fire stations, and water or wastewater facilities in the utility's certificated service area;

(I) the utility's emergency operations plan filed with the commission; and

(J) other engineering or operational needs; and

(2) submit to the commission the assessment under Subdivision (1) for review.

(n) The commission may:

(1) establish the capacity of facilities that may be operated by a transmission and distribution utility in aid of restoration for each type or category of significant power outage;

(2) establish reasonable conditions on the operation and use of facilities, including duration times and prioritizing use to serve critical infrastructure facilities that serve the public such as hospitals, health care facilities, law enforcement facilities, fire stations, and water or wastewater facilities; and

(3) require compliance with applicable law, including any rule or order of the commission.

(o) Notwithstanding Subsections (m) and (n), a transmission and distribution utility may:

(1) provide facilities to or use facilities from other entities as part of a mutual assistance agreement during a significant power outage; and

(2) lease facilities on a short-term basis in response to a significant power outage if:

(A) the significant power outage constitutes an emergency and the utility determines that additional facilities are necessary;

(B) the term of the lease is only for the duration of that emergency;

(C) the utility notifies the commission of the lease not later than the 30th day after the date of the lease agreement; and

(D) the commission reviews the costs incurred by the utility in a proceeding under Section 36.210 or in another ratemaking proceeding.

[(k) This section expires September 1, 2029.]

SECTION 2. Section 502.146(b), Transportation Code, is amended to read as follows:

(b) An owner is not required to register a vehicle that is used only temporarily on the highways if the vehicle is:

(1) a farm trailer or farm semitrailer with a gross weight of more than 4,000 pounds but not more than 34,000 pounds that is used exclusively:

(A) to transport seasonally harvested agricultural products or livestock from the place of production to the place of processing, market, or storage;

(B) to transport farm supplies from the place of loading to the farm; or

(C) for the purpose of participating in equine activities or attending livestock shows, as defined by Section 87.001, Civil Practice and Remedies Code;

(2) machinery used exclusively for the purpose of drilling water wells;

(3) oil well servicing or drilling machinery and if at the time of obtaining the license plates, the applicant submits proof that the applicant has a permit under Section 623.142; or

(4) construction machinery, including construction machinery that is:

(A) owned by a transmission and distribution utility as defined by Section 31.002, Utilities Code; and

(B) used to maintain or repair electrical lines or substations in response to a power outage.

SECTION 3. (a) The changes in law made in Section 1 of this Act apply only to a proceeding before the Public Utility Commission of Texas or other regulatory authority described by Section 11.003, Utilities Code, that commences on or after the effective date of this Act. A proceeding before the Public Utility Commission of Texas or other regulatory authority described by Section 11.003, Utilities Code, that commenced before the effective date of this Act is governed by the law in effect on the date the proceeding commenced, and that law is continued in effect for that purpose.

(b) The changes in law made in Section 1 of this Act apply only to a contract or lease entered into or facilities procured on or after the effective date of this Act.

SECTION 4. To the extent of any conflict, this Act prevails over another Act of the 88th Legislature, Regular Session, 2023, relating to nonsubstantive additions to and corrections in enacted codes.

SECTION 5. This Act takes effect September 1, 2023.