S.B. No. 2627
 
 
 
 
AN ACT
  relating to funding mechanisms to support the construction,
  maintenance, modernization, and operation of electric generating
  facilities.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  This Act may be cited as the Powering Texas
  Forward Act.
         SECTION 2.  Subtitle B, Title 2, Utilities Code, is amended
  by adding Chapter 34 to read as follows:
  CHAPTER 34.  FACILITY FUNDING
  SUBCHAPTER A.  TEXAS ENERGY FUND; GRANTS AND LOANS
         Sec. 34.0101.  DEFINITIONS. In this subchapter:
               (1)  "Advisory committee" means the Texas Energy Fund
  Advisory Committee.
               (2)  "Fund" means the Texas energy 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.  GRANTS FOR FACILITIES OUTSIDE ERCOT POWER
  REGION. (a)  The commission may use money in the fund without
  further appropriation to provide grants to be used for transmission
  and distribution infrastructure and electric generating facilities
  in this state outside the ERCOT power region for:
               (1)  facility modernization;
               (2)  facility weatherization;
               (3)  reliability and resiliency facility enhancements;
  or
               (4)  vegetation management.
         (b)  In evaluating an application for a grant under this
  section, the commission:
               (1)  shall evaluate whether the project for which the
  grant is requested is reasonable; and
               (2)  may consider any other appropriate factors.
         (c)  Information submitted to the commission in an
  application for a grant under this section is confidential and not
  subject to disclosure under Chapter 552, Government Code.
         (d)  Proceeds of a grant received under this section may not
  be used for:
               (1)  compliance with weatherization standards adopted
  before December 1, 2023; or
               (2)  debt payments.
         Sec. 34.0104.  LOANS FOR ERCOT POWER REGION. (a) The
  commission may use money in the fund without further appropriation
  to provide loans to finance upgrades to existing dispatchable
  electric generating facilities providing power for the ERCOT power
  region that result in a net increase of at least 100 megawatts of
  capacity for each facility or the construction of dispatchable
  electric generating facilities providing power for the ERCOT power
  region that each have a generation capacity of at least 100
  megawatts.  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.  An electric
  energy storage facility is not eligible for a loan under this
  section.
         (b)  The commission may provide a construction loan under
  this section only:
               (1)  for construction of a facility that will have a
  generation capacity of at least 100 megawatts and that does not meet
  the planning model requirements necessary to be included in the
  Capacity Demand and Reserves Report of the independent organization
  certified under Section 39.151 for the ERCOT power region before
  June 1, 2023;
               (2)  in an amount that does not exceed 60 percent of the
  estimated cost of the facility to be constructed; and
               (3)  if the agreement ensures that the loan is to be the
  senior debt secured by the facility.
         (c)  The commission shall evaluate an application for a loan
  under this section based on:
               (1)  the applicant's:
                     (A)  quality of services and management;
                     (B)  efficiency of operations;
                     (C)  history of electricity generation operations
  in this state and this country;
                     (D)  resource operation attributes;
                     (E)  ability to address regional and reliability
  needs;
                     (F)  access to resources essential for operating
  the facility for which the loan is requested, such as land, water,
  and reliable infrastructure, as applicable; and
                     (G)  evidence of creditworthiness and ability to
  repay the loan on the terms established in the loan agreement,
  including the applicant's total assets, total liabilities, net
  worth, and credit ratings issued by major credit rating agencies;
               (2)  the generation capacity and estimated costs of the
  project for which the loan is requested; and
               (3)  any other factors the commission considers
  appropriate.
         (d)  Outstanding loans provided under this section and
  grants provided under Section 34.0105, considered together, may not
  support the addition or construction of more than 10,000 megawatts
  of generation capacity.
         (e)  An electric utility other than a river authority may not
  receive a loan under this section.
         (f)  A loan provided under this section must:
               (1)  have a term of 20 years;
               (2)  be payable ratably starting on the third
  anniversary of the estimated commercial operation date of the
  facility for which the loan was provided, as stated in the loan
  application; and
               (3)  bear an interest rate of three percent.
         (g)  The commission shall require each recipient of a loan
  under this section to deposit in an escrow account held by the
  comptroller an amount of money equal to three percent of the
  estimated cost of the project for which the loan is provided. The
  deposit must be made before the initial loan funds are disbursed.
  The loan recipient may not withdraw the deposit unless authorized
  by the commission.
         (h)  For money deposited under Subsection (g) for a loan for
  the construction of a new facility, the commission:
               (1)  shall authorize the loan recipient to withdraw the
  deposit from the escrow account if the facility for which the loan
  was provided is interconnected in the ERCOT power region before the
  fourth anniversary of the date the initial loan funds were
  disbursed; or
               (2)  after the fourth anniversary of the date the
  initial loan funds were disbursed, may authorize the loan recipient
  to withdraw the deposit from the escrow account if the facility for
  which the loan was provided is interconnected in the ERCOT power
  region not later than the fifth anniversary of the date the initial
  loan funds were disbursed and the commission determines that
  extenuating circumstances justify the delay in completion.
         (i)  For money deposited under Subsection (g) for a loan for
  an upgrade to an existing facility, the commission:
               (1)  shall authorize the loan recipient to withdraw the
  deposit from the escrow account if the project for which the loan
  was provided is completed before the third anniversary of the date
  the initial loan funds were disbursed; or
               (2)  after the third anniversary of the date the
  initial loan funds were disbursed, may authorize the loan recipient
  to withdraw the deposit from the escrow account if the project for
  which the loan was provided is completed not later than the fourth
  anniversary of the date the initial loan funds were disbursed and
  the commission determines that extenuating circumstances justify
  the delay in completion.
         (j)  The comptroller shall deposit to the credit of the fund
  any escrow funds described by Subsection (g) that the commission
  may not authorize to be withdrawn by a loan recipient.
         (k)  Information submitted to the commission in an
  application for a loan under this section is confidential and not
  subject to disclosure under Chapter 552, Government Code.
         (l)  The commission may not disburse the initial funds for a
  loan under this section after December 31, 2025.
         (m)  This section expires September 1, 2050.
         Sec. 34.0105.  COMPLETION BONUS GRANTS. (a)  The commission
  shall provide, using money available in the fund for the purpose
  without further appropriation, a completion bonus grant for the
  construction of dispatchable electric generating facilities 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. An
  electric energy storage facility is not eligible for a grant under
  this section.
         (b)  The amount of a grant under this section must be based on
  the megawatts of capacity provided to the ERCOT power region by the
  facility. 
         (c)  The commission may provide a grant under this section
  only for construction of a facility that:
               (1)  will have a generation capacity of at least 100
  megawatts; and
               (2)  does not meet the planning model requirements
  necessary to be included in the Capacity Demand and Reserves Report
  of the independent organization certified under Section 39.151 for
  the ERCOT power region before June 1, 2023.
         (d)  The commission shall evaluate an application for a grant
  under this section based on:
               (1)  the applicant's:
                     (A)  quality of services and management;
                     (B)  efficiency of operations;
                     (C)  history of electricity generation operations
  in this state and this country;
                     (D)  resource operation attributes; and
                     (E)  ability to address regional and reliability
  needs;
               (2)  the generation capacity and estimated
  construction costs of the facility for which the grant is
  requested; and
               (3)  any other factors the commission considers
  appropriate.
         (e)  Information submitted to the commission in an
  application for a grant under this section is confidential and not
  subject to disclosure under Chapter 552, Government Code.
         (f)  Unless the commission determines that extenuating
  circumstances justify extending the deadlines provided by this
  subsection, the commission may not provide a grant under this
  section of more than:
               (1)  $120,000 per megawatt of capacity provided by a
  facility that is interconnected in the ERCOT power region before
  June 1, 2026; or
               (2)  $80,000 per megawatt of capacity provided by a
  facility that is interconnected in the ERCOT power region on or
  after June 1, 2026, and before June 1, 2029.
         (g)  Unless the commission determines that extenuating
  circumstances justify extending the deadline provided by this
  subsection, the commission may not provide a grant under this
  section for a facility that is interconnected in the ERCOT power
  region on or after June 1, 2029.
         (h)  The commission shall provide for the proceeds of each
  grant awarded under this section to be disbursed to the grant
  recipient by equal annual payments over a 10-year period that
  begins on the first anniversary of the commercial operations date
  of the facility for which the grant is provided. The annual
  payments are subject to being withheld or discounted in accordance
  with Subsection (i). The total of the annual disbursements may not
  exceed the maximum amount as limited by Subsection (f).
         (i)  The commission by rule shall establish performance
  standards for grant recipients based on reliability metrics,
  appropriate for the types of facilities for which grants may be
  provided, for performance during the 100 hours with the least
  quantity of operating reserves for each year. The commission may
  not disburse a grant recipient's annual payment under Subsection
  (h) if the performance of the facility for which the grant was
  provided is equal to or below the median performance standard
  established under this subsection during a test period designated
  by the commission for that year. The commission may disburse a
  discounted amount of a grant recipient's annual payment under
  Subsection (h) if the performance of the facility for which the
  grant was provided is above the median performance standard
  established under this subsection during a test period designated
  by the commission for that year but less than an optimal performance
  standard established by the commission. The commission shall by
  rule adopt a system for determining the amount by which the
  commission will discount an annual payment based on facility
  performance under this subsection.
         (j)  This section expires December 1, 2040.
         Sec. 34.0106.  LOAN AND GRANT RESTRICTIONS.  (a)  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.
         (b)  The commission may not provide a loan or a grant under
  this chapter:
               (1)  for a facility that will be used primarily to serve
  an industrial load or private use network; or
               (2)  for the construction or operation of a natural gas
  transmission pipeline.
         (c)  The commission shall require each recipient of a loan
  under this chapter to enter into a debt covenant that requires the
  recipient to meet facility performance standards adopted by the
  commission. The commission by rule shall adopt performance
  standards for the purposes of this subsection based on reliability
  metrics appropriate for the types of facilities for which loans may
  be provided.
         (d)  Each facility for which a loan or grant is provided
  under Section 34.0104 or 34.0105 must participate in the ERCOT
  wholesale electricity market.
         (e)  The commission may provide from the fund:
               (1)  for grants under Section 34.0103, not more than $1
  billion;
               (2)  for loans and grants under Sections 34.0104 and
  34.0105, not more than $7.2 billion; and
               (3)  for grants or loans under Subchapter B, not more
  than $1.8 billion.
         Sec. 34.0107.  MANAGEMENT AND INVESTMENT OF FUND. (a) The
  trust company shall hold and invest 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
  commingled 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 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'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. 34.0108.  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. 34.0109.  TEXAS ENERGY 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. 34.0110.  RULES. (a)  The commission by rule may
  establish procedures for:
               (1)  the application for and award of a grant or 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.
  SUBCHAPTER B. TEXAS POWER PROMISE: BACKUP POWER PACKAGES
         Sec. 34.0201.  DEFINITION. In this subchapter, "Texas
  backup power package" means a stand-alone, behind-the-meter,
  multiday backup power source that can be used for islanding.
         Sec. 34.0202.  PURPOSE. The purpose of this subchapter is to
  facilitate and provide funding for the design, procurement,
  installation, and use of Texas backup power packages to ensure the
  reliability or adequacy of an electric power grid in this state for
  facilities on which communities rely for health, safety, and
  well-being.
         Sec. 34.0203.  COMMISSION DUTIES. (a) The commission shall
  convene an advisory committee in the manner provided by Chapter
  2110, Government Code.
         (b)  The advisory committee shall recommend criteria for the
  commission to employ in making a grant or loan under this
  subchapter.
         (c)  The commission 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. 34.0204.  TEXAS BACKUP POWER PACKAGES. The commission
  may use money in the Texas energy fund without further
  appropriation to provide a grant or loan 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.
         Sec. 34.0205.  GRANTS AND LOANS. (a) The commission by rule
  may establish procedures for the application for and award of a
  grant or loan under this subchapter.
         (b)  The amount of a grant provided under this subchapter may
  not exceed $500 per kilowatt of capacity.
         (c)  The commission may provide a loan under this subchapter
  for procurement and operating costs.
         (d)  The commission 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.
         (e)  The commission 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.
         SECTION 3.  Section 35.005, Utilities Code, is amended by
  adding Subsections (d), (e), (f), and (g) to read as follows:
         (d)  This subsection applies only to a facility in the ERCOT
  power region for which a loan or grant is provided under Subchapter
  A, Chapter 34. The independent organization certified under
  Section 39.151 for the ERCOT power region shall work with electric
  utilities to ensure that each facility in the ERCOT power region for
  which a loan or grant is provided is fully interconnected in the
  region not later than the date the facility is ready for commercial
  operation. The independent organization certified under Section
  39.151 for the ERCOT power region shall give priority to
  interconnecting each facility for which a loan or grant is provided
  except that the organization shall prioritize transmission
  projects that the organization has formally designated as critical
  for reliability over a facility for which a loan or grant is
  provided.  An electric utility that enters into an interconnection
  agreement for a facility for which a loan or grant is provided shall
  give priority to interconnecting the facility and complete
  construction of any other facilities necessary to interconnect the
  facility not later than the date the facility is ready for
  commercial operation except that the utility shall prioritize
  transmission projects that the independent organization certified
  under Section 39.151 for the ERCOT power region has formally
  designated as critical for reliability over a facility for which a
  loan or grant is provided.
         (e)  If the commission receives an application under Chapter
  37 for a certificate of convenience and necessity related to
  facilities necessary to interconnect a facility to which Subsection
  (d) applies 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 facility
  before the deadline is not feasible.
         (g)  In this subsection, "Texas backup power package" has the
  meaning assigned by Section 34.0201.  The commission by rule shall
  adopt procedures to expedite an electric utility interconnection
  request for a Texas backup power package for which a loan or grant
  is awarded under Chapter 34.
         SECTION 4.  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 34.0201, Utilities 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 and for which a loan or grant is awarded
  under Chapter 34, Utilities Code.
         SECTION 5.  Not later than June 1, 2024, the Public Utility
  Commission of Texas shall begin accepting loan applications for
  loans authorized by Subchapter A, Chapter 34, Utilities Code, as
  added by this Act.  Not later than December 31, 2025, the Public
  Utility Commission of Texas shall approve or deny each loan
  application and disburse initial loan funds for each approved
  applicant.
         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 energy fund
  to support the construction, maintenance, modernization, and
  operation of electric generating facilities takes effect.  If that
  amendment is not approved by the voters, this Act has no effect.
 
 
 
 
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
         I hereby certify that S.B. No. 2627 passed the Senate on
  May 4, 2023, by the following vote:  Yeas 27, Nays 4;
  May 25, 2023, Senate refused to concur in House amendments and
  requested appointment of Conference Committee; May 26, 2023, House
  granted request of the Senate; May 28, 2023, Senate adopted
  Conference Committee Report by the following vote:  Yeas 30,
  Nays 1.
 
 
  ______________________________
  Secretary of the Senate    
 
         I hereby certify that S.B. No. 2627 passed the House, with
  amendments, on May 23, 2023, by the following vote:  Yeas 118,
  Nays 23, one present not voting; May 26, 2023, House granted
  request of the Senate for appointment of Conference Committee;
  May 28, 2023, House adopted Conference Committee Report by the
  following vote:  Yeas 114, Nays 20, two present not voting.
 
 
  ______________________________
  Chief Clerk of the House   
 
 
 
  Approved:
 
  ______________________________ 
             Date
 
 
  ______________________________ 
            Governor