By: Johnson S.B. No. 2112

(In the Senate - Filed March 9, 2023; March 21, 2023, read first time and referred to Committee on Business & Commerce; April 18, 2023, reported adversely, with favorable Committee Substitute by the following vote: Yeas 10, Nays 0; April 18, 2023, sent to printer.) Click here to see the committee vote

COMMITTEE SUBSTITUTE FOR S.B. No. 2112 By: Johnson

A BILL TO BE ENTITLED

AN ACT

relating to resources used to ensure the continuous provision of power.

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

SECTION 1. Subchapter C, Chapter 382, Health and Safety Code, is amended by adding Section 382.069 to read as follows:

Sec. 382.069. TEXAS BACKUP POWER PACKAGE. (a) In this section, "Texas backup power package" has the meaning assigned by Section 418.401, Government Code.

(b) The commission by rule shall adopt a process to expedite the permitting of a Texas backup power package for which a permit is required under this chapter.

SECTION 2. Chapter 418, Government Code, is amended by adding Subchapter K to read as follows:

SUBCHAPTER K. TEXAS POWER PROMISE

Sec. 418.401. DEFINITIONS. In this subchapter:

(1) "Fund" means the Texas power resiliency fund established by Section 49-q, Article III, Texas Constitution.

(2) "Texas backup power package" means a stand-alone, behind-the-meter, multiday backup power source that can be used for islanding.

(3) "Trust company" means the Texas Treasury Safekeeping Trust Company.

Sec. 418.402. PURPOSE. The purpose of this subchapter is to facilitate and provide funding for:

(1) the design, procurement, installation, and use of Texas backup power packages for facilities on which communities rely for health, safety, and well-being; and

(2) the procurement and use of mobile sources of backup power to ensure the health, safety, and well-being of communities.

Sec. 418.403. DIVISION DUTIES. (a) The division shall convene an advisory committee in the manner provided by Chapter 2110, Government Code.

(b) The advisory committee shall recommend criteria for the division to employ in making a grant or loan under this subchapter.

(c) The division shall contract with a research entity that has experience in microgrid design to analyze critical facility characteristics and requirements in this state and develop for Texas backup power packages:

(1) sets of specifications for standard backup power packages of various sizes that can serve most critical facilities in this state; and

(2) specifications for standard interconnection, communications, and controls for Texas backup power packages.

Sec. 418.404. TEXAS BACKUP POWER PACKAGES. (a) A grant or loan made under this subchapter may be provided only for the operation of a Texas backup power package that:

(1) is engineered to minimize operation costs;

(2) uses interconnection technology and controls that enable immediate islanding from the power grid and stand-alone operation for the host facility;

(3) is capable of operating for at least 48 continuous hours without refueling or connecting to a separate power source;

(4) is designed so that one or more Texas backup power packages can be aggregated on-site to serve not more than 2.5 megawatts of load at the host facility;

(5) provides power sourced from:

(A) a combination of natural gas or propane with photovoltaic panels and battery storage; or

(B) battery storage on an electric school bus; and

(6) is not used by the owner or host facility for the sale of energy or ancillary services.

(b) Texas backup power packages may be aggregated and operated to support the power grid under emergency conditions if the operation does not compromise a Texas backup power package's capability to provide power to its host facility for at least 24 hours of operation without refueling or connecting to a separate power source.

Sec. 418.405. GRANTS AND LOANS. (a) The division may provide grants and loans under this subchapter.

(b) The division by rule may establish procedures for:

(1) the application for and award of a grant or loan under this subchapter; and

(2) the administration of the fund.

(c) The amount of a grant provided under this subchapter may not exceed $500 per kilowatt of capacity.

(d) The division may provide a loan under this subchapter for procurement and operating costs.

(e) The division shall maintain and publish a list of approved vendors eligible to assist with the sale, installation, operation, and ongoing maintenance of Texas backup power packages.

(f) The division may not provide a grant or loan under this subchapter for:

(1) a commercial energy system, a private school, or a for-profit entity that does not directly serve public safety and human health; or

(2) a source of backup power that does not follow the design and use standards of a Texas backup power package.

Sec. 418.406. MOBILE BACKUP POWER FLEET. The division may use money from the fund to procure and deploy mobile sources of backup power to ensure the health, safety, and well-being of communities.

Sec. 418.407. FUND. (a) The Texas power resiliency fund is a special fund in the state treasury outside the general revenue fund to be administered and used, without further appropriation, by the division.

(b) The fund and the fund's accounts are kept and held by the trust company for and in the name of the division.

(c) Money deposited to the credit of the fund may be used only as provided by this subchapter.

(d) The fund consists of:

(1) money credited, appropriated, or transferred to the fund by the legislature;

(2) revenue that the legislature dedicates for deposit to the credit of the fund;

(3) the returns received from the investment of money in the fund; and

(4) gifts, grants, and donations contributed to the fund.

Sec. 418.408. MANAGEMENT AND INVESTMENT OF FUND. (a) The trust company shall hold and invest the fund, taking into account the purposes for which money in the fund may be used. The fund may be invested with the state treasury pool or pooled with other state assets for purposes of investment.

(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 over a full economic cycle.

(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 shall be paid from the fund.

(e) The trust company annually shall provide a written report to the division 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. The investment advisory board shall submit to the trust company recommendations regarding the policy.

(g) The division annually shall provide to the trust company a forecast of the cash flows into and out of the fund. The division 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 division.

SECTION 3. Section 38.076, Utilities Code, is amended by adding Subsection (c-1) to read as follows:

(c-1) The commission shall require transmission and distribution utilities to use good faith efforts to ensure that no distribution feeder is subject to load shedding for more than four consecutive hours in a six-hour period.

SECTION 4. Subchapter D, Chapter 38, Utilities Code, is amended by adding Section 38.078 to read as follows:

Sec. 38.078. CIRCUIT SEGMENTATION STUDY AND COST RECOVERY. (a) Not later than September 15, 2023, the commission shall direct each transmission and distribution utility to perform a circuit segmentation study.

(b) A circuit segmentation study must:

(1) use an engineering analysis to examine whether and how the transmission and distribution utility's transmission and distribution systems can be segmented and sectionalized to manage and rotate outages more evenly across all customers and circuits, while maintaining the protections offered to critical facilities;

(2) include an engineering analysis of the feasibility of using sectionalization, automated reclosers, and other technology to break up the circuits that host significant numbers of critical facilities into smaller segments for outage management purposes to enable more granular and flexible outage management;

(3) identify feeders with extensive numbers of critical facilities that, if equipped with facility-specific backup power systems and segmentation, can enhance the utility's outage management flexibility; and

(4) include an estimate of the time, capital cost, and expected improvements to load-shed management associated with the circuit segmentation study.

(c) Each transmission and distribution utility shall submit a report of the conclusions of the utility's study to the commission not later than September 1, 2024.

(d) The commission shall review each circuit segmentation study not later than March 15, 2025.

(e) If the commission determines that the implementation of circuit segmentation engineering and investments as provided by a transmission and distribution utility's circuit segmentation study report would facilitate better outage management in the ERCOT power region, investments made by the utility for such purposes shall be presumed just, reasonable, and appropriate for rate-based cost recovery.

SECTION 5. Subchapter Z, Chapter 39, Utilities Code, is amended by adding Section 39.919 to read as follows:

Sec. 39.919. TEXAS BACKUP POWER PACKAGES. (a) In this section, "Texas backup power package" has the meaning assigned by Section 418.401, Government Code.

(b) The commission by rule shall adopt procedures to expedite electric cooperative, municipally owned utility, and electric utility interconnection requests for Texas backup power packages.

SECTION 6. This Act 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 power resiliency fund to finance backup power sources takes effect. If that amendment is not approved by the voters, this Act has no effect.

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