88R9643 CXP-D
 
  By: Schwertner, et al. S.B. No. 1368
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the continuation and functions of the Public Utility
  Commission of Texas and the Office of Public Utility Counsel, and
  the functions of the independent organization certified for the
  ERCOT power region.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 12.005, Utilities Code, is amended to
  read as follows:
         Sec. 12.005.  APPLICATION OF SUNSET ACT. The Public Utility
  Commission of Texas is subject to Chapter 325, Government Code
  (Texas Sunset Act). Unless continued in existence as provided by
  that chapter or by Chapter 39, the commission is abolished [and this
  title expires] September 1, 2029 [2023].
         SECTION 2.  Section 12.059, Utilities Code, is amended to
  read as follows:
         Sec. 12.059.  TRAINING PROGRAM FOR COMMISSIONERS. (a) A
  person who is appointed to and qualifies for office as a member of
  the commission may not vote, deliberate, or be counted as a member
  in attendance at a meeting of the commission until the person
  completes a [Before a commissioner may assume the commissioner's
  duties and before the commissioner may be confirmed by the senate,
  the commissioner must complete at least one course of the] training
  program that complies with [established under] this section.
         (b)  The [A] training program must [established under this
  section shall] provide the person with information [to the
  commissioner] regarding:
               (1)  the law governing [enabling legislation that
  created the] commission operations [and its policymaking body to
  which the commissioner is appointed to serve];
               (2)  the programs, functions, rules, and budget of
  [operated by] the commission;
               (3)  the scope [role and functions] of and limitations
  on the rulemaking authority of the commission;
               (4)  the results [rules] of the most recent formal
  audit of the commission [with an emphasis on the rules that relate
  to disciplinary and investigatory authority];
               (5)  the requirements of:
                     (A)  laws relating to open meetings, public
  information, administrative procedure, and disclosing conflicts of
  interest; and
                     (B)  other laws applicable to members of a state
  policy-making body in performing their duties [current budget for
  the commission]; and
               (6)  [the results of the most recent formal audit of the
  commission;
               [(7)  the requirements of Chapters 551, 552, and 2001,
  Government Code;
               [(8)  the requirements of the conflict of interest laws
  and other laws relating to public officials; and
               [(9)]  any applicable ethics policies adopted by the
  commission or the Texas Ethics Commission.
         (c)  A person [who is] appointed to the commission is
  entitled to reimbursement, as provided by the General
  Appropriations Act, for the travel expenses incurred in attending
  the training program regardless of whether the attendance at the
  program occurs before or after the person qualifies for office.
         (d)  The executive director of the commission shall create a
  training manual that includes the information required by
  Subsection (b). The executive director shall distribute a copy of
  the training manual annually to each member of the commission. Each
  member of the commission shall sign and submit to the executive
  director a statement acknowledging that the member received and has
  reviewed the training manual.
         SECTION 3.  Section 12.202, Utilities Code, is amended by
  adding Subsections (a-1) and (a-2) to read as follows:
         (a-1)  The policies adopted under this section must require
  the agenda for each regular commission meeting to include public
  testimony as a meeting agenda item and allow members of the public
  to comment on:
               (1)  each meeting agenda item unrelated to a contested
  case; and
               (2)  other matters under the commission's jurisdiction.
         (a-2)  The commission may prohibit public comment at a
  regular commission meeting on a meeting agenda item related to a
  contested case.
         SECTION 4.  Section 12.203, Utilities Code, is amended to
  read as follows:
         Sec. 12.203.  BIENNIAL REPORT. (a) Not later than January
  15 of each odd-numbered year, the commission shall prepare a
  written report that includes:
               (1)  suggestions regarding modification and
  improvement of the commission's statutory authority and for the
  improvement of utility regulation in general, including the
  regulation of water and sewer service under Chapter 13, Water Code,
  that the commission considers appropriate for protecting and
  furthering the interest of the public;
               (2)  a report on the scope of competition in the
  electric and telecommunications markets that includes:
                     (A)  an assessment of:
                           (i)  the effect of competition and industry
  restructuring on customers in both competitive and noncompetitive
  electric markets; and
                           (ii)  the effect of competition on the rates
  and availability of electric services for residential and small
  commercial customers;
                     (B)  an assessment of the effect of competition
  on:
                           (i)  customers in both competitive and
  noncompetitive telecommunications markets, with a specific focus
  on rural markets; and
                           (ii)  the rates and availability of
  telecommunications services for residential and business
  customers, including any effects on universal service; and
                     (C)  a summary of commission action over the
  preceding two years that reflects changes in the scope of
  competition in regulated electric and telecommunications markets;
  and
               (3)  recommendations for legislation that the
  commission determines appropriate to promote the public interest in
  the context of partially competitive electric and
  telecommunications markets.
         (b)  A telecommunications utility, as defined by Section
  51.002, shall cooperate with the commission as necessary for the
  commission to satisfy the requirements of this section.
         SECTION 5.  Subchapter E, Chapter 12, Utilities Code, is
  amended by adding Section 12.205 to read as follows:
         Sec. 12.205.  STRATEGIC COMMUNICATIONS PLAN. The commission
  shall:
               (1)  develop an agency-wide plan for:
                     (A)  improving the effectiveness of commission
  communications with the public, market participants, and other
  relevant audiences; and 
                     (B)  responding to changing communications needs; 
               (2)  include in the plan required by Subdivision (1)
  goals, objectives, and metrics to assess commission efforts; and
               (3)  update the plan required by Subdivision (1) at
  least once every two years.
         SECTION 6.  Section 13.002, Utilities Code, is amended to
  read as follows:
         Sec. 13.002.  APPLICATION OF SUNSET ACT. The Office of
  Public Utility Counsel is subject to Chapter 325, Government Code
  (Texas Sunset Act). Unless continued in existence as provided by
  that chapter, the office is abolished [and this chapter expires]
  September 1, 2029 [2023].
         SECTION 7.  Section 39.151, Utilities Code, is amended by
  amending Subsections (d), (g-1), and (g-6) and adding Subsection
  (g-7) to read as follows:
         (d)  The commission shall adopt and enforce rules relating to
  the reliability of the regional electrical network and accounting
  for the production and delivery of electricity among generators and
  all other market participants, or may delegate those
  responsibilities to an independent organization [responsibilities
  for adopting or enforcing such rules. Rules adopted by an
  independent organization and enforcement actions taken by the
  organization under delegated authority from the commission are
  subject to commission oversight and review and may not take effect
  before receiving commission approval]. An independent organization
  certified by the commission is directly responsible and accountable
  to the commission. The commission has complete authority to
  oversee and investigate the independent organization's finances,
  budget, and operations as necessary to ensure the organization's
  accountability and to ensure that the organization adequately
  performs the organization's functions and duties. The independent
  organization shall fully cooperate with the commission in the
  commission's oversight and investigatory functions. The
  commission may take appropriate action against an independent
  organization that does not adequately perform the organization's
  functions or duties or does not comply with this section, including
  decertifying the organization or assessing an administrative
  penalty against the organization. The commission by rule shall
  adopt procedures governing decertification of an independent
  organization, selecting and certifying a successor organization,
  and transferring assets to the successor organization to ensure
  continuity of operations in the region. The commission may not
  implement, by order or by rule, a requirement that is contrary to an
  applicable federal law or rule.
         (g-1)  The [independent organization's] bylaws of an
  independent organization certified for the ERCOT power region [or
  protocols] must be approved by [the commission] and [must] reflect
  the input of the commission. The bylaws must require that every
  member of the governing body be a resident of this state and must
  prohibit a legislator from serving as a member. The governing body
  must be composed of:
               (1)  two members [the chairman] of the commission as
  [an] ex officio nonvoting members:
                     (A)  one of whom must be the presiding officer of
  the commission; and
                     (B)  one of whom must be designated by the
  presiding officer of the commission to serve a one-year term on the
  governing body [member];
               (2)  the counsellor as an ex officio voting member
  representing residential and small commercial consumer interests;
               (3)  the chief executive officer of the independent
  organization as an ex officio nonvoting member; and
               (4)  eight members selected by the selection committee
  under Section 39.1513 with executive-level experience in any of the
  following professions:
                     (A)  finance;
                     (B)  business;
                     (C)  engineering, including electrical
  engineering;
                     (D)  trading;
                     (E)  risk management;
                     (F)  law; or
                     (G)  electric market design.
         (g-6)  In this subsection, a reference to a protocol includes
  a rule. Protocols adopted by an independent organization and
  enforcement actions taken by the organization under delegated
  authority from the commission are subject to commission oversight
  and review and may not take effect before receiving commission
  approval. To maintain certification as an independent organization
  under this section, the organization's governing body must
  establish and implement a formal process for adopting new protocols
  or revisions to existing protocols. The process must require that
  new or revised protocols may not take effect until the commission
  approves a market impact statement describing the new or revised
  protocols. The commission may approve, reject, or remand with
  suggested modifications to the independent organization's
  governing body protocols adopted by the organization.
         (g-7)  The presiding officer of the commission shall
  designate commissioners to serve terms on the independent
  organization's governing body under Subsection (g-1)(1)(B) in the
  order in which the commissioners were first appointed to the
  commission. A commissioner may not serve an additional term until
  each commissioner has served a term.
         SECTION 8.  Section 39.1511, Utilities Code, is amended by
  amending Subsection (a) and adding Subsection (a-1) to read as
  follows:
         (a)  Meetings of the governing body of an independent
  organization certified under Section 39.151 and meetings of a
  subcommittee that includes a member of the governing body must be
  open to the public. The bylaws of the independent organization and
  the rules of the commission may provide for the governing body or
  subcommittee to enter into executive session closed to the public
  only to address [sensitive matters such as confidential personnel
  information,] contracts, [lawsuits,] competitively sensitive
  information, [or other] information related to the security of the
  regional electrical network, or a matter which the commission would
  be authorized to consider in a closed meeting under Chapter 551,
  Government Code.
         (a-1)  An independent organization's governing body or a
  subcommittee may adopt a policy allowing the governing body or
  subcommittee to enter into an executive session closed to the
  public and commissioners, including the commissioners serving as ex
  officio nonvoting members, in specific circumstances to address a
  matter authorized under Subsection (a). A policy described by this
  subsection is not subject to approval by the commission.
         SECTION 9.  Subchapter D, Chapter 39, Utilities Code, is
  amended by adding Section 39.1514 to read as follows:
         Sec. 39.1514.  COMMISSION DIRECTIVES TO INDEPENDENT
  ORGANIZATION. (a) The commission may not use a verbal directive
  to direct an independent organization certified under Section
  39.151 to take an official action. The commission may direct the
  organization to take an official action only through:
               (1)  a contested case;
               (2)  rulemaking;
               (3)  a memorandum; or
               (4)  a written order.
         (b)  The commission by rule shall:
               (1)  specify the types of directives the commission may
  issue through a contested case, rulemaking, memorandum, or written
  order;
               (2)  establish the conditions under which a commission
  vote is required before issuing a directive;
               (3)  require that proposed commission directives be
  included as an item on a commission meeting agenda and require the
  commission to allow members of the public an opportunity to comment
  on the agenda item; and
               (4)  establish a reasonable timeline for the release
  before a commission meeting of discussion materials relevant to
  any proposed commission directives included as agenda items for
  that meeting.
         (c)  Notwithstanding another provision of this section, the
  commission may use a verbal directive to direct an independent
  organization to take an official action in an urgent or emergency
  situation that poses an imminent threat to public health, public
  safety, or the reliability of the power grid. The commission by rule
  shall establish criteria for determining whether a situation is
  urgent or an emergency under this subsection and establish a
  process by which the commission will issue directives to the
  independent organization under this subsection. If an independent
  organization follows a verbal directive for more than 72 hours, the
  commission shall use a process adopted under this section to
  provide written documentation of the directive to the independent
  organization.
         SECTION 10.  Section 39.155(d), Utilities Code, is amended
  to read as follows:
         (d)  In a qualifying power region, the report [reports]
  required by Subsection (c) [Subsections (b) and (c)] shall be
  submitted by the independent organization or organizations having
  authority over the power region or discrete areas thereof.
         SECTION 11.  Section 39.157(f), Utilities Code, is amended
  to read as follows:
         (f)  Following review of the annual report [reports]
  submitted to it under Section 39.155(c) [Sections 39.155(b) and
  (c)], the commission shall determine whether specific transmission
  or distribution constraints or bottlenecks within this state give
  rise to market power in specific geographic markets in the state.
  The commission, on a finding that specific transmission or
  distribution constraints or bottlenecks within this state give rise
  to market power, may order reasonable mitigation of that potential
  market power by ordering, under Section 39.203(e), one or more
  electric utilities or transmission and distribution utilities to
  construct additional transmission or distribution capacity, or
  both, subject to the certification provisions of this title.
         SECTION 12.  (a) This section takes effect only if the Act
  of the 88th Legislature, Regular Session, 2023, relating to
  nonsubstantive additions to and corrections in enacted codes
  becomes law.
         (b)  Subchapter D, Chapter 39, Utilities Code, is amended by
  adding Sections 39.166 and 39.167 to read as follows:
         Sec. 39.166.  ELECTRIC INDUSTRY REPORT. (a) Not later than
  January 15 of each odd-numbered year, the commission, in
  consultation with the independent organization certified under
  Section 39.151 for the ERCOT power region, shall prepare and submit
  to the legislature an electric industry report.
         (b)  Each electric industry report submitted under this
  section must:
               (1)  identify existing and potential transmission and
  distribution constraints and system needs within the ERCOT power
  region, alternatives for meeting system needs, and recommendations
  for meeting system needs;
               (2)  summarize key findings from:
                     (A)  the grid reliability assessment conducted
  under Section 39.165; and
                     (B)  the report required by Section 39.904(k);
               (3)  outline basic information regarding the electric
  grid and market in this state, including generation capacity,
  customer demand, and transmission capacity currently installed on
  the grid and projected in the future; and
               (4)  be presented in plain language that is readily
  understandable by a person with limited knowledge of the electric
  industry.
         Sec. 39.167.  CONFLICTS OF INTEREST REPORT. The commission
  and the independent organization certified under Section 39.151 for
  the ERCOT power region annually shall review statutes, rules,
  protocols, and bylaws that apply to conflicts of interest for
  commissioners and for members of the governing body of the
  independent organization and submit to the legislature a report on
  the effects the statutes, rules, protocols, and bylaws have on the
  ability of the commission and the independent organization to
  fulfill their duties.
         SECTION 13.  (a) This section takes effect only if the Act of
  the 88th Legislature, Regular Session, 2023, relating to
  nonsubstantive additions to and corrections in enacted codes does
  not become law.
         (b)  Subchapter D, Chapter 39, Utilities Code, is amended by
  adding Sections 39.166 and 39.167 to read as follows:
         Sec. 39.166.  ELECTRIC INDUSTRY REPORT. (a) Not later than
  January 15 of each odd-numbered year, the commission, in
  consultation with the independent organization certified under
  Section 39.151 for the ERCOT power region, shall prepare and submit
  to the legislature an electric industry report.
         (b)  Each electric industry report submitted under this
  section must:
               (1)  identify existing and potential transmission and
  distribution constraints and system needs within the ERCOT power
  region, alternatives for meeting system needs, and recommendations
  for meeting system needs;
               (2)  summarize key findings from:
                     (A)  the grid reliability assessment conducted
  under Section 39.159, as added by Chapter 876 (S.B. 1281), Acts of
  the 87th Legislature, Regular Session, 2021; and
                     (B)  the report required by Section 39.904(k);
               (3)  outline basic information regarding the electric
  grid and market in this state, including generation capacity,
  customer demand, and transmission capacity currently installed on
  the grid and projected in the future; and
               (4)  be presented in plain language that is readily
  understandable by a person with limited knowledge of the electric
  industry.
         Sec. 39.167.  CONFLICTS OF INTEREST REPORT. The commission
  and the independent organization certified under Section 39.151 for
  the ERCOT power region annually shall review statutes, rules,
  protocols, and bylaws that apply to conflicts of interest for
  commissioners and for members of the governing body of the
  independent organization and submit to the legislature a report on
  the effects the statutes, rules, protocols, and bylaws have on the
  ability of the commission and the independent organization to
  fulfill their duties.
         SECTION 14.  Section 39.203(i), Utilities Code, is amended
  to read as follows:
         (i)  The commission, in cooperation with transmission and
  distribution utilities and the ERCOT independent system operator,
  shall study whether existing transmission and distribution
  planning processes are sufficient to provide adequate
  infrastructure for seawater desalination projects. If the
  commission determines that statutory changes are needed to ensure
  that adequate infrastructure is developed for projects of that
  kind, the commission shall include recommendations in the report
  required by Section 12.203 [31.003].
         SECTION 15.  Section 39.206(q), Utilities Code, is amended
  to read as follows:
         (q)  The commission shall, in conjunction with the Nuclear
  Regulatory Commission, investigate the development of a mechanism
  whereby the State of Texas could ensure that funds for
  decommissioning will be obtained when necessary in the same manner
  as if the State of Texas were the licensee under federal law. [The
  commission shall file legislative recommendations regarding any
  changes in law that may be necessary to carry out the purposes of
  this subsection prior to January 15, 2009, which may be combined
  with the report required by Section 31.003.]
         SECTION 16.  Section 39.904(k), Utilities Code, is amended
  to read as follows:
         (k)  The commission and the independent organization
  certified under Section 39.151 for the ERCOT power region [for
  ERCOT] shall study the need for increased transmission and
  generation capacity throughout this state and report to the
  legislature the results of the study and any recommendations for
  legislation. The report must be filed with the legislature not
  later than December 31 of each even-numbered year [and may be filed
  as a part of the report required by Subsection (j)].
         SECTION 17.  Section 39.9055, Utilities Code, is amended to
  read as follows:
         Sec. 39.9055.  EXAMINATION OF DEMAND RESPONSE POTENTIAL OF
  SEAWATER DESALINATION PROJECTS. The commission and the ERCOT
  independent system operator shall study the potential for seawater
  desalination projects to participate in existing demand response
  opportunities in the ERCOT market. To the extent feasible, the
  study shall determine whether the operational characteristics of
  seawater desalination projects enable projects of that kind to
  participate in ERCOT-operated ancillary services markets or other
  competitively supplied demand response opportunities. The study
  shall also determine the potential economic benefit to a seawater
  desalination project if the project is able to reduce its demand
  during peak pricing periods. The commission shall include the
  results of the study in the report required by Section 12.203
  [31.003].
         SECTION 18.  Section 39.908, Utilities Code, is amended to
  read as follows:
         Sec. 39.908.  EFFECT OF SUNSET PROVISION. [(a)] If the
  commission is abolished under Section 12.005 or other law, the [and
  the other provisions of this title expire as provided by Chapter
  325, Government Code (Texas Sunset Act), this subchapter, including
  the provisions of this title referred to in this subchapter,
  continues in full force and effect and does not expire.
         [(b)  The] authorities, duties, and functions of the
  commission under this chapter shall be performed and carried out by
  a successor agency to be designated by the legislature before
  abolishment of the commission or, if the legislature does not
  designate the successor, by the secretary of state.
         SECTION 19.  Section 52.060, Utilities Code, is amended to
  read as follows:
         Sec. 52.060.  ADMINISTRATIVE FEE OR ASSESSMENT. The
  commission may prescribe and collect a fee or assessment from local
  exchange companies necessary to recover the cost to the commission
  and to the office of activities carried out and services provided
  under this subchapter and Section 12.203 [52.006].
         SECTION 20.  Section 13.4132, Water Code, is amended by
  adding Subsection (b-1) to read as follows:
         (b-1)  Notwithstanding Section 5.505, the term of an
  emergency order issued under this section by the utility commission
  or the commission may not exceed 360 days. The emergency order may
  be renewed:
               (1)  once for a period not to exceed 360 days; or
               (2)  if the utility is undergoing a sale, transfer,
  merger, consolidation, or acquisition required to be reported to
  the utility commission under Section 13.301, for a reasonable time
  until the sale, transfer, merger, consolidation, or acquisition is
  complete.
         SECTION 21.  (a) The following provisions are repealed:
               (1)  Section 304.201, Business & Commerce Code;
               (2)  Section 31.003, Utilities Code;
               (3)  Section 39.155(b), Utilities Code;
               (4)  Section 39.904(j), Utilities Code; and
               (5)  Section 52.006, Utilities Code.
         (b)  Section 34, Chapter 426 (S.B. 3), Acts of the 87th
  Legislature, Regular Session, 2021, is repealed.
         SECTION 22.  The presiding officer of the Public Utility
  Commission of Texas shall designate a commissioner to serve a term
  on the governing body of the independent organization certified
  under Section 39.151, Utilities Code, for the ERCOT power region
  that begins January 1, 2024, to comply with Section 39.151(g-1),
  Utilities Code, as amended by this Act.
         SECTION 23.  (a)  Except as provided by Subsection (b) of
  this section, Section 12.059, Utilities Code, as amended by this
  Act, applies to a member of the Public Utility Commission of Texas
  appointed before, on, or after the effective date of this Act.
         (b)  A member of the Public Utility Commission of Texas who,
  before the effective date of this Act, completed the training
  program required by Section 12.059, Utilities Code, as that law
  existed before the effective date of this Act, is only required to
  complete additional training on the subjects added by this Act to
  the training program required by Section 12.059, Utilities Code.  A
  commission member described by this subsection may not vote,
  deliberate, or be counted as a member in attendance at a meeting of
  the commission held on or after December 1, 2023, until the member
  completes the additional training.
         SECTION 24.  This Act takes effect September 1, 2023.