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AN ACT
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relating to the planning for, interconnection and operation of, and |
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costs related to providing service for certain electrical loads and |
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to the generation of electric power by a water supply or sewer |
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service corporation. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 35.004, Utilities Code, is amended by |
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adding Subsections (c-1) and (c-2) to read as follows: |
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(c-1) The commission by rule shall ensure that a large load |
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customer who is subject to the standards adopted under Section |
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37.0561 contributes to the recovery of the interconnecting electric |
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utility's costs to interconnect the large load to the utility's |
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system. |
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(c-2) An electric cooperative or municipally owned utility |
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that has not adopted customer choice shall pass through to a large |
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load customer who is subject to the standards adopted under Section |
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37.0561 the reasonable costs to interconnect the large load in a |
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manner determined by the electric cooperative or municipally owned |
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utility. |
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SECTION 2. Subchapter B, Chapter 37, Utilities Code, is |
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amended by adding Section 37.0561 to read as follows: |
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Sec. 37.0561. PLANNING FOR AND INTERCONNECTION OF LARGE |
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LOADS. (a) For the purposes of this section, a large load customer |
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includes an entity requesting an interconnection that exceeds the |
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demand threshold adopted under Subsection (c) and a successor in |
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interest to such an entity. |
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(b) The commission by rule shall establish standards for |
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interconnecting large load customers in the ERCOT power region in a |
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manner designed to support business development in this state while |
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minimizing the potential for stranded infrastructure costs and |
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maintaining system reliability. |
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(c) The standards must apply only to customers requesting a |
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new or expanded interconnection where the total load at a single |
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site would exceed a demand threshold established by the commission |
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based on the size of loads that significantly impact transmission |
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needs in the ERCOT power region. The commission shall establish a |
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demand threshold of 75 megawatts unless the commission determines |
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that a lower threshold is necessary to accomplish the purposes |
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described by Subsection (b). |
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(d) The standards must require each large load customer |
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subject to Subsection (c) to disclose to the interconnecting |
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electric utility or municipally owned utility whether the customer |
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is pursuing a substantially similar request for electric service in |
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this state the approval of which would result in the customer |
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materially changing, delaying, or withdrawing the interconnection |
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request. The disclosure may withhold or anonymize competitively |
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sensitive details. The commission by rule shall prohibit an |
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electric utility or municipally owned utility from selling, |
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sharing, or disclosing information submitted to the utility under |
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this subsection other than a disclosure to the commission or the |
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independent organization certified under Section 39.151 for the |
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ERCOT power region, subject to appropriate confidentiality |
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protections. |
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(e) The standards must require each interconnected large |
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load customer subject to Subsection (c) to disclose to the |
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interconnecting electric utility or municipally owned utility |
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information about the customer's on-site backup generating |
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facilities and require the interconnecting electric utility or |
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municipally owned utility to provide the information to the |
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independent organization certified under Section 39.151 for the |
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ERCOT power region. For the purposes of this subsection, "on-site |
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backup generating facilities" means generation that is not capable |
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of exporting energy to the ERCOT transmission grid and that, in the |
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aggregate, can serve at least 50 percent of on-site demand. The |
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independent organization shall establish a threshold before or |
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during an energy emergency alert at which the organization may |
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issue reasonable notice that large load customers with on-site |
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backup generating facilities may be directed to either deploy the |
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customer's on-site backup generating facilities or curtail load. |
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After the independent organization deploys all available market |
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services, except for frequency responsive services, the |
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independent organization may direct the applicable electric |
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utility or municipally owned utility to require the large load |
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customer to either deploy the customer's on-site backup generating |
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facilities or curtail load. The independent organization shall |
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include a deployment under this section as firm load shed when |
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calculating any price adjustments for reliability deployments. |
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This subsection does not: |
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(1) authorize or require a violation of any emissions |
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limitation in state or federal law or a violation of any other |
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environmental regulation; or |
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(2) prohibit a large load customer from participating |
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in a service authorized by Section 39.170(b). |
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(f) The standards must set a flat study fee of at least |
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$100,000 to be paid to the interconnecting electric utility or |
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municipally owned utility for initial transmission screening |
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studies for large loads subject to Subsection (c). A large load |
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customer that requests additional capacity following the screening |
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study must pay an additional study fee based on the new request. |
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The interconnecting electric utility or municipally owned utility |
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shall apply any unused portion of the initial transmission |
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screening study fee as a credit toward satisfying financial |
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obligations for procurement or interconnection agreements at the |
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same geographic site. |
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(g) The standards must include a method for a large load |
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customer subject to Subsection (c) to demonstrate site control for |
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the proposed load location through an ownership interest, lease, or |
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another legal interest acceptable to the commission. |
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(h) The standards must include uniform financial commitment |
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requirements for the development of transmission infrastructure |
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needed to serve a large load customer subject to Subsection (c). |
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The standards must provide that satisfactory proof of financial |
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commitment may include: |
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(1) security provided on a dollar per megawatt basis |
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as set by the commission; |
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(2) contribution in aid of construction; |
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(3) security provided under an agreement that requires |
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a large load customer to pay for significant equipment or services |
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in advance of signing an agreement to establish electric delivery |
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service; or |
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(4) a form of financial commitment acceptable to the |
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commission other than those provided by Subdivisions (1)-(3). |
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(i) Security provided under Subsection (h)(1) must be |
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refunded, in whole or in part, after the security is applied to any |
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outstanding amounts owed: |
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(1) as the large load customer meets the customer's |
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load ramp milestones and sustains operations for a prescribed |
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period as determined by the commission; |
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(2) if the large load customer withdraws the |
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customer's request for all or a portion of the requested capacity; |
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or |
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(3) if capacity subject to a financial commitment will |
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be reallocated to one or more other customers. |
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(j) The commission shall establish uniform requirements for |
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determining when capacity that is subject to an outstanding |
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financial commitment under this section may be reallocated. |
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(k) The standards must establish a procedure to allow the |
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independent organization certified under Section 39.151 for the |
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ERCOT power region to access any information collected by the |
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interconnecting electric utility or municipally owned utility to |
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ensure compliance with the standards for transmission planning |
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analysis. Any customer-specific or competitively sensitive |
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information obtained under this subsection is confidential and not |
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subject to disclosure under Chapter 552, Government Code. |
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(l) The commission may not limit the authority of a |
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municipally owned utility or an electric cooperative to impose |
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electric service requirements for large load customers on their |
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systems in addition to the standards adopted under this section. |
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(m) Notwithstanding the forecasted load growth and |
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additional load currently seeking interconnection required to be |
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considered under Section 37.056(c-1), the commission by rule shall |
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establish criteria by which the independent organization certified |
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under Section 39.151 for the ERCOT power region includes forecasted |
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large load of any peak demand in the organization's transmission |
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planning and resource adequacy models and reports. |
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SECTION 3. Section 39.002, Utilities Code, is amended to |
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read as follows: |
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Sec. 39.002. APPLICABILITY. This chapter, other than |
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Sections 39.151, 39.1516, 39.155, 39.157(e), 39.161, 39.162, |
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39.163, 39.169, 39.170, 39.203, 39.9051, 39.9052, and 39.914(e), |
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and Subchapters M and N, does not apply to a municipally owned |
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utility or an electric cooperative. Sections 39.157(e) and 39.203 |
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apply only to a municipally owned utility or an electric |
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cooperative that is offering customer choice. If there is a |
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conflict between the specific provisions of this chapter and any |
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other provisions of this title, except for Chapters 40 and 41, the |
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provisions of this chapter control. |
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SECTION 4. Subchapter D, Chapter 39, Utilities Code, is |
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amended by adding Sections 39.169 and 39.170 to read as follows: |
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Sec. 39.169. CO-LOCATION OF LARGE LOAD CUSTOMER WITH |
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EXISTING GENERATION RESOURCE. (a) A power generation company, |
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municipally owned utility, or electric cooperative must submit a |
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notice to the independent organization certified under Section |
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39.151 for the ERCOT power region before implementing a net |
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metering arrangement between an operating facility registered with |
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the independent organization as a stand-alone generation resource |
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as of September 1, 2025, and a new large load customer as described |
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by Section 37.0561(c). |
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(b) This section does not apply to a generation resource: |
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(1) the registration for which included a co-located |
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large load customer at the time of energization, regardless of |
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whether the load was energized at a later date; or |
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(2) a majority interest of which is owned indirectly |
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or directly as of January 1, 2025, by a parent company of the |
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customer that participates in the new net metering arrangement. |
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(c) The electric cooperative, transmission and distribution |
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utility, or municipally owned utility that provides electric |
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service at the location of the new net metering arrangement may for |
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reasonable cause including a violation of other law, object to the |
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arrangement, provided however, that no reasonable cause objection |
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may be raised after a final decision by the commission is issued |
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under this section. |
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(d) The independent organization certified under Section |
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39.151 for the ERCOT power region shall study the system impacts of |
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a proposed net metering arrangement and removal of generation for |
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which the independent organization receives a notice under |
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Subsection (a) after the independent organization receives all |
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information regarding the arrangement required by the independent |
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organization to be submitted to the independent organization. The |
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independent organization must complete the study and submit the |
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results to the commission with any associated recommendations not |
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later than the 120th day after the independent organization |
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receives all required information regarding the arrangement. Not |
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later than the 60th day after the date the commission receives the |
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study results from the independent organization, the commission |
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shall approve, deny, or impose reasonable conditions on the |
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proposed net metering arrangement as necessary to maintain system |
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reliability, including transmission security and resource adequacy |
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impacts. The conditions must require a generation resource that |
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makes dispatchable capacity available to the ERCOT power region |
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before the implementation of a net metering arrangement under this |
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section to make at least that amount of dispatchable capacity |
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available to the ERCOT power region after the implementation of the |
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arrangement at the direction of the independent organization in |
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advance of an anticipated emergency condition. The conditions may |
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include: |
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(1) requiring the retail customer who is served |
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behind-the-meter to reduce load during certain events; |
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(2) requiring the generation resource to make capacity |
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available to the ERCOT power region during certain events; or |
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(3) requiring customers to be held harmless for |
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stranded or underutilized transmission assets resulting from the |
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behind-the-meter operation. |
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(e) If the commission does not approve, deny, or impose |
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reasonable conditions on a proposed net metering arrangement before |
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the expiration of the deadline established by Subsection (d), the |
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commission is considered to have approved the arrangement. |
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(f) If conditions imposed under Subsection (d) are not |
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limited to a specific period, the commission shall review the |
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conditions at least every five years to determine whether the |
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conditions should be extended or rescinded. |
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(g) The parties to a proceeding under this section are |
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limited to the commission, the independent organization certified |
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under Section 39.151 for the ERCOT power region, the |
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interconnecting electric cooperative, transmission and |
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distribution utility, or municipally owned utility, and a party in |
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the net metering arrangement. |
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(h) The commission shall post the decision made on each |
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notice submitted under this section on the commission's Internet |
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website. The commission may not post information regarding the |
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decision that is competitively sensitive or otherwise considered |
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confidential. |
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Sec. 39.170. LARGE LOAD DEMAND MANAGEMENT SERVICE. |
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(a) The commission shall require the independent organization |
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certified under Section 39.151 for the ERCOT power region to ensure |
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that each electric cooperative, transmission and distribution |
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utility, and municipally owned utility serving a |
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transmission-voltage customer develops a protocol, including the |
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installation of any necessary equipment or technology before the |
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customer is interconnected, to allow the load to be curtailed |
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during firm load shed. The electric cooperative, transmission and |
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distribution utility, or municipally owned utility shall confer |
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with the customer to the extent feasible to shed load in a |
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coordinated manner. This subsection applies only to a load |
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interconnected after December 31, 2025, that is not: |
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(1) load operated by a critical load industrial |
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customer, as defined by Section 17.002; or |
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(2) designated as a critical natural gas facility |
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under Section 38.074. |
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(b) The commission shall require the independent |
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organization certified under Section 39.151 for the ERCOT power |
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region to develop a reliability service to competitively procure |
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demand reductions from large load customers with a demand of at |
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least 75 megawatts to be deployed in the event of an anticipated |
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emergency condition. The rules governing this service must: |
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(1) specify the periods when the service may be used to |
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assist with maintaining reliability during extreme weather events; |
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(2) ensure that the independent organization provides |
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at least a 24-hour notice to large load customers and requires each |
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large load to remain curtailed for the duration of the energy |
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emergency alert event or until the load can be recalled safely; and |
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(3) prohibit participation by any large load customer |
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that curtails in response to the wholesale price of electricity, as |
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determined by the independent organization certified under Section |
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39.151 for the ERCOT power region, or that otherwise participates |
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in a different reliability or ancillary service. |
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(c) The independent organization certified under Section |
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39.151 for the ERCOT power region shall include a deployment under |
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this section when calculating any price adjustments for reliability |
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deployments. |
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SECTION 5. Subchapter A, Chapter 67, Water Code, is amended |
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by adding Section 67.0115 to read as follows: |
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Sec. 67.0115. ELECTRIC GENERATION. (a) A corporation may |
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generate electric power for use in the corporation's operations, |
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limited to: |
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(1) powering water well pumps, service pumps, and |
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other equipment for the production, treatment, and transportation |
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of raw water; and |
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(2) powering infrastructure for the treatment and |
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delivery of potable drinking water. |
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(b) For the purposes of Subsection (a), a corporation |
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operating solely as a wholesale water supplier or sewer service in a |
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county with a population of less than 350,000 may generate excess |
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electric power in conjunction with the uses described in Subsection |
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(a) for sale in the ERCOT power region to provide revenue for the |
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corporation only if the corporation: |
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(1) primarily generates electric power solely for the |
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uses described in Subsection (a); and |
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(2) registers as a power generation company under |
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Section 39.351, Utilities Code. |
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(c) A corporation that generates electric power for sale |
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under Subsection (b) shall account for and use the revenue from |
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those sales in a manner that complies with Section 67.004. The |
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revenue that accrues from those sales of electric power may be used |
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by the corporation only for: |
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(1) the corporation's costs of producing and selling |
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electric power, including administration, employees, equipment, |
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fuel, and maintenance; or |
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(2) a purpose described by Section 67.002. |
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SECTION 6. (a) The Public Utility Commission of Texas shall |
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evaluate whether the existing methodology used to charge wholesale |
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transmission costs to distribution providers under Section |
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35.004(d), Utilities Code, continues to appropriately assign costs |
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for transmission investment. The commission shall also evaluate: |
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(1) whether the current four coincident peak |
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methodology used to calculate wholesale transmission rates ensures |
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that all loads appropriately contribute to the recovery of an |
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electric cooperative's, electric utility's, or municipally owned |
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utility's costs to provide access to the transmission system; |
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(2) whether alternative methods to calculate |
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wholesale transmission rates would more appropriately assign the |
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cost of providing access to and wholesale service from the |
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transmission system, such as consideration of multiple seasonal |
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peak demands, demand during different length daily intervals, or |
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peak energy intervals; and |
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(3) the portion of the costs related to access to and |
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wholesale service from the transmission system that should be |
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nonbypassable, consistent with Section 35.004(c-1), Utilities |
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Code, as added by this Act. |
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(b) The Public Utility Commission of Texas shall evaluate |
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whether the commission's retail ratemaking practices ensure that |
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transmission cost recovery appropriately charges the system costs |
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that are caused by each customer class. |
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(c) The Public Utility Commission of Texas shall begin the |
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evaluation required under Subsection (a) of this section not later |
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than the 90th day after the effective date of this Act. After |
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completion of the evaluation project and not later than December |
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31, 2026, the commission shall amend commission rules to ensure |
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that wholesale transmission charges appropriately assign costs for |
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transmission investment. |
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SECTION 7. Section 35.004(c-1), Utilities Code, as added by |
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this Act, applies only to an interconnection agreement entered into |
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on or after the effective date of this Act. |
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SECTION 8. This Act takes effect immediately if it receives |
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a vote of two-thirds of all the members elected to each house, as |
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provided by Section 39, Article III, Texas Constitution. If this |
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Act does not receive the vote necessary for immediate effect, this |
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Act takes effect September 1, 2025. |
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______________________________ |
______________________________ |
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President of the Senate |
Speaker of the House |
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I hereby certify that S.B. No. 6 passed the Senate on |
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March 19, 2025, by the following vote: Yeas 31, Nays 0; and that |
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the Senate concurred in House amendments on May 29, 2025, by the |
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following vote: Yeas 31, Nays 0. |
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______________________________ |
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Secretary of the Senate |
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I hereby certify that S.B. No. 6 passed the House, with |
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amendments, on May 27, 2025, by the following vote: Yeas 103, |
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Nays 25, two present not voting. |
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______________________________ |
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Chief Clerk of the House |
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Approved: |
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______________________________ |
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Date |
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______________________________ |
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Governor |