BILL ANALYSIS

C.S.H.B. 5224

By: Guillen

Energy Resources

Committee Report (Substituted)

BACKGROUND AND PURPOSE

The bill author has informed the committee that current rules governing critical natural gas infrastructure designations do not distinguish between year-round and seasonal operations, potentially including facilities that are not active or necessary during certain times of the year, which limits the effectiveness of prioritizing energy resources and emergency preparedness, especially in the ERCOT power region where efficient coordination between regulators and energy providers is vital. C.S.H.B. 5224 seeks to enhance the reliability of the electric grid during extreme weather and improve how critical infrastructure is designated and integrated into emergency response planning by providing for designations of seasonal critical customers in order to recognize that some facilities may only be essential during specific seasons.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

RULEMAKING AUTHORITY

It is the committee's opinion that rulemaking authority is expressly granted to the Railroad Commission of Texas in SECTION 1 of this bill and to the Public Utility Commission of Texas in SECTION 2 of this bill.

ANALYSIS

C.S.H.B. 5224 amends the Natural Resources Code, with respect to rules for which the Railroad Commission of Texas (RRC) is required to collaborate with the Public Utility Commission of Texas (PUC) to adopt to establish a process to designate certain natural gas facilities and entities associated with providing natural gas in Texas as critical customers or critical gas suppliers during energy emergencies, to require the rules to establish criteria for a facility operating under RRC jurisdiction that has been designated as a critical customer to be designated as a seasonal  critical customer. The bill requires the RRC, not later than February 1, 2026, to adopt rules as necessary to establish such criteria and requires the RRC, for the purposes of the rules, to establish the following:

· standards for determining the seasons during which a facility may be designated as a seasonal critical customer, including the beginning and end dates for each season; and

· a process to allow a person who owns or operates a facility to apply to the RRC to be designated as a seasonal critical customer, including allowing an owner or operator to apply for a seasonal designation as part of a critical infrastructure designation application.

The bill requires the RRC annually to provide a list of facilities designated as seasonal critical customers to the PUC and requires the PUC to provide each updated list to ERCOT. The bill requires the RRC, not later than March 31, 2026, to provide to the PUC the first list of designated facilities and requires the PUC, not later than April 30, 2026, to provide the list to ERCOT.

C.S.H.B. 5224 requires the PUC, not later than February 1, 2026, to adopt rules as necessary to allow ERCOT to competitively procure demand reductions from a facility that has been designated as a seasonal critical customer during the season in which the facility has been so designated.

EFFECTIVE DATE

On passage, or, if the bill does not receive the necessary vote, September 1, 2025.

COMPARISON OF INTRODUCED AND SUBSTITUTE

While C.S.H.B. 5224 may differ from the introduced in minor or nonsubstantive ways, the following summarizes the substantial differences between the introduced and committee substitute versions of the bill.

The substitute includes a specification that was not in the introduced that the provision by the RRC to the PUC of a list of facilities designated as seasonal critical customers is on an annual basis. The substitute includes a provision that was not in the introduced requiring the PUC to provide each updated list to ERCOT.

While both the introduced and substitute provide rulemaking authority for the RRC and the PUC, the substitute omits provisions relating to the date by which any applicable rulemaking project must begin.