By: Darby H.B. No. 3970

A BILL TO BE ENTITLED

AN ACT

relating to the interconnection and operation of large loads.

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

SECTION 1. Subchapter D, Chapter 39, Utilities Code, is amended by adding Section 39.169 to read as follows:

Sec. 39.169. LARGE LOAD INTERCONNECTION. (a) In this section:

(1) "Behind-the-meter generation" means a generation facility on the retail customer's side of the meter capable of serving the full load requirement of the retail customer.

(2) "Flexible load" means a large load operated by a retail customer who is obligated by contract or agreement in the ERCOT market to reduce the load or power the load exclusively with back-up generation:

(A) at the direction of the independent organization certified under Section 39.151 for the ERCOT power region; or

(B) as required to protect the integrity of the ERCOT grid.

(b) The commission by rule shall establish a program to provide an expedited process for the interconnection of large loads. The program must require the interconnecting electric cooperative, municipally owned utility, or transmission and distribution utility and the independent organization certified under Section 39.151 for the ERCOT power region to give priority in the interconnection queue to a large load for which a retail customer has received approval for expedited processing over any other large loads that have not entered into a contractual agreement with the electric utility, electric cooperative, or municipally owned utility regarding the provision of electric service. If applicable, the generation interconnection application for a generation facility associated with the large load must be processed in parallel with the large load.

(c) The program must require a large load to qualify for expedited interconnection processing by bringing in-service, not later than the 180th day after the interconnection date, behind-the-meter generation that is:

(1) registered with the independent organization certified under Section 39.151 for the ERCOT power region; and

(2) capable of serving the full load requirement of the customer.

(d) As an alternative to the requirements of Subsection (c), a large load may qualify for expedited interconnection processing, if the load is a facility with an aggregated peak demand at a single site of more than 75 megawatts, by:

(1) providing to the interconnecting electric cooperative, municipally owned utility, or transmission and distribution utility all data regarding, and posting all required financial security for, the load; and

(2) being subject to a binding commitment with the independent organization certified under Section 39.151 for the ERCOT power region to establish the load as a flexible load for a minimum period established by the commission, which must be at least 10 years.

(e) A large load that qualifies for expedited interconnection processing may choose:

(1) if authorized by the independent organization certified under Section 39.151 for the ERCOT power region and the relevant electric cooperative, municipally owned utility, or transmission and distribution utility, to contract with a vendor approved by the relevant electric cooperative, municipally owned utility, or transmission and distribution utility or by the independent organization to perform all studies required by the relevant electric cooperative, municipally owned utility, or transmission and distribution utility before the approval of the interconnection application; and

(2) if authorized by the relevant electric cooperative, municipally owned utility, or transmission and distribution utility:

(A) to procure equipment required for the interconnection in accordance with technical specifications provided by the relevant electric cooperative, municipally owned utility, or transmission and distribution utility; and

(B) to construct interconnection facilities in accordance with technical and other requirements of the relevant electric cooperative, municipally owned utility, or transmission and distribution utility.

(f) The program may provide that studies required by an electric cooperative, municipally owned utility, or transmission and distribution utility before the approval of an interconnection application for a flexible load may evaluate the load as non-firm.

(g) Demand reductions from flexible loads that receive expedited processing and are removed from the system through the utilization of behind-the-meter generation during an energy emergency alert must be counted toward any obligation of the electric cooperative, municipally owned utility, or transmission and distribution utility to shed load.

(h) The independent organization certified under Section 39.151 for the ERCOT power region shall consider action taken under this section as a reliability deployment when calculating any price adjustments for reliability deployments.

(i) The commission shall establish financial penalties the commission may impose on an owner or operator of a large load that is approved for expedited interconnection processing but fails to reduce the load or power the load with back-up generation as directed by the independent organization certified under Section 39.151 for the ERCOT power region.

SECTION 2. This Act takes effect September 1, 2025.