By: Nichols S.B. No. 1866
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the use of customer-sited distributed generation
  facilities owned by certain non-ERCOT electric utilities.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subchapter E, Chapter 36, Utilities Code, is
  amended by adding Section 36.215 to read as follows:
         Sec. 36.215.  RECOVERY OF INVESTMENT IN DISTRIBUTED
  GENERATION AND RATES FOR BACKUP ELECTRIC SERVICE FOR CERTAIN
  NON-ERCOT UTILITIES.  (a)  In this section:
               (1)  "Customer-sited distributed generation facility"
  means a dispatchable generation facility that is installed on the
  electric utility's side of the retail meter and owned and operated
  by the electric utility:
                     (A)  with a nameplate capacity of not more than 10
  megawatts;
                     (B)  that is capable of generating and providing
  backup electric service to a customer during a power grid outage;
  and
                     (C)  sited at or adjacent to the customer's
  premises.
               (2)  "Host customer" means a customer receiving backup
  electric service under this section.
         (b)  This section applies only to an electric utility that
  operates solely outside of ERCOT in areas of this state included in
  the Southeastern Electric Reliability Council.
         (c)  An electric utility may provide backup electric service
  to a nonresidential retail customer through a customer-sited
  distributed generation facility.
         (d)  The commission, on the petition of an electric utility,
  shall establish just and reasonable rates for backup electric
  service supplied using a customer-sited distributed generation
  facility, consistent with this chapter, provided that costs are
  allocated as follows:
               (1)  if the facility is capable of directly supplying
  energy to the distribution system or of disconnecting the host
  customer from the distribution system when not being used to supply
  backup electric service to the host customer and thereby reducing
  system load, the commission shall allocate the cost of owning and
  operating the facility between the host customer and the electric
  utility's broader customer base, including an allocation of any
  margins from energy sales attributable to the facility to the host
  customer in reasonable proportion to the allocation of nonfuel
  costs as provided by Subdivision (2); and
               (2)  the allocation of nonfuel costs to the host
  customer must be based on the cost to purchase, install,
  interconnect, own, operate, and maintain the facility that is above
  the electric utility's levelized avoided cost to install, own,
  operate, and maintain a single-cycle combustion turbine, on a per
  kilowatt basis, grossed up for avoided line losses based on the
  utility's transmission and distribution line loss factors last
  approved by the commission.
         (e)  In a rate proceeding in which an electric utility seeks
  to recover the utility's investment in a customer-sited distributed
  generation facility that is interconnected to the utility's
  distribution system:
               (1)  the full cost of the utility's investment is
  eligible for recovery; and
               (2)  the cost of the facility and backup electric
  service revenues must be allocated among customer classes on the
  same basis used to allocate the utility's distribution-level
  investments.
         SECTION 2.  This Act takes effect immediately if it receives
  a vote of two-thirds of all the members elected to each house, as
  provided by Section 39, Article III, Texas Constitution.  If this
  Act does not receive the vote necessary for immediate effect, this
  Act takes effect September 1, 2023.