By: Virdell H.B. No. 4817

A BILL TO BE ENTITLED

AN ACT

relating to reliability requirements and associated locational marginal pricing for certain electric generation facilities.

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

SECTION 1. Section 39.1592, Utilities Code, is amended to read as follows:

Sec. 39.1592. GENERATION RELIABILITY REQUIREMENTS. (a) This section applies only to an electric generation facility in the ERCOT power region [for which a standard generator interconnection agreement is signed on or after January 1, 2027,] that has been in operation for at least one year, and that is not a self-generator.

(a-1) In this section:

(1) "Pooling" or "pooled generation" means a combination of electric generation facilities in the same load zone that elect to meet the reliability standard established under this Section by sharing, supplementing, or contracting with on-site or off-site resources.

(2) "Reliability standard" means the percentage of an electric generation facility's nameplate capacity that is available to be dispatched under most operating conditions absent extreme circumstances.

(b) Not later than January 1, 2027[December 1 of each year], the commission shall establish a single reliability standard for all electric generation facilities. The commission may adjust the reliability standard but may not require less than the ability to run at an availability of 50 percent of the nameplate capacity of the equipment operated by the generator. [an owner or operator of an electric generation facility, other than a battery energy storage resource, shall demonstrate to the commission the ability of the owner or operator's portfolio to operate or be available to operate when called on for dispatch at or above the seasonal average generation capability during the times of highest reliability risk, as determined by the commission, due to low operation reserves, as determined by the commission. The owner or operator of an electric generation facility must be allowed to meet the reliability standard established under[performance requirements described by] this subsection by pooling with other electrical generation facilities within the same load zone. [supplementing or contracting with on-site or off-site resources, including battery energy storage resources. The commission shall determine the average generation capability based on expected resource availability and seasonal-rated capacity on a standalone basis.]

(c) The commission shall adopt rules for calculating a settlement price cap, accounting for all subsidies available, for electric generation facilities that opt out of the reliability standard established under Subsection (b). The settlement price cap for electric generation facilities that opt-out of the reliability standard:

(1) shall not be greater than $50 per megawatt hour on January 1, 2027; and

(2) shall not be greater than $30 per megawatt hour on or before January 1, 2037. [The commission shall require the independent organization certified under Section 39.151 for the ERCOT power region to:

(1) enforce the requirements of Subsection (b) by imposing financial penalties, as determined by the commission, for failing to comply with the performance requirements described by that subsection; and

(2) provide financial incentives, as determined by the commission, for exceeding the performance requirements described by that subsection.]

(d) The real-time settlement price for electric generation facilities that opt-out of the reliability standard established under Subsection (b) may not fall below $0 per megawatt hour.

(e) An electric generation facility that opts-out of the reliability standard under Subsection (b) and sells power when the real-time settlement price is between $0 per megawatt hour and the cap calculated under Subsection (c) shall receive the real-time settlement price. At no time shall an electric generation facility that opts-out of the reliability standard under Subsection (b) receive more than the cap calculated under Subsection (c).

(f) Any revenue from power sold in the ERCOT market subject to the settlement price cap calculated under Subsection (c) shall be subtracted from the total generation billed to all Retail Electric Providers for each period the power is sold.

(g) The commission shall establish set dates for each owner or operator of an electric generation facility or pooled generation facility to elect to meet the reliability standard established under Subsection (b), which shall not be more often than four times per year.

(h) Electric generation facilities that elect to meet the reliability standard established under Subsection (b) by pooling must meet the reliability standard based upon the combined nameplate capacity of the pooled generation sites. Pooled generation facilities must bid into the market as a single generation site.

(i) Any owner or operator of an electric generation facility or pooled generation facility that made the election under Subsection (g), but failed to meet the reliability standard established under Subsection (b) shall pay the difference between the replacement power to cover the load lost and the offered price of the undelivered load on the real-time market. Should the offered price of the generation facility or pooled generation facility be greater than 80 percent of the high system-wide offer cap, any failure to meet the reliability standard shall be calculated at 80 percent of the high system-wide offer cap instead of the offered price.

(j) A penalty assessed against an owner or operator of an electric generation facility or pooled generation facility under Subsection (i) shall be subtracted from the total generation billed to all Retail Electric Providers for each period such penalty is assessed.

(l)[(d)] The independent organization certified under Section 39.151 for the ERCOT power region may not impose penalties under Subsection (h)[(c)]:

(1) for resource unavailability due to planned maintenance outages or transmission outages; or

(2) on resources that are already subject to performance obligations during the highest reliability risk hours under the day-ahead market rules or other ancillary or reliability services established by the commission or the independent organization.[;or

(3) during hours outside a baseline established by the commission that includes morning and evening ramping periods.]

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