By:AA____________________ __.B.ANo.

A_____

Substitute the following for __.B.ANo.A_____:

By:AA____________________ C.S.__.B.ANo.A_____

A BILL TO BE ENTITLED

1 AN ACT

2 relating to the establishment of the Texas Energy Insurance Program

3 and other funding mechanisms to support the construction and

4 operation of electric generating facilities.

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

6 ARTICLE 1. TEXAS ENERGY INSURANCE PROGRAM

7 SECTIONA1.01.AASection 11.003(16), Utilities Code, is

8 amended to read as follows:

9 (16)AA"Rate" includes:

10 (A)AAany compensation, tariff, charge, fare,

11 toll, rental, or classification that is directly or indirectly

12 demanded, observed, charged, or collected by a public utility or an

13 entity operating under Section 39.360 for a service, product, or

14 commodity described in the definition of utility in Section 31.002

15 or 51.002; and

16 (B)AAa rule, practice, or contract affecting the

17 compensation, tariff, charge, fare, toll, rental, or

18 classification.

19 SECTIONA1.02.AASection 31.002(6), Utilities Code, as amended

20 by Chapters 255 (H.B.A1572) and 389 (S.B.A1202), Acts of the 87th

21 Legislature, Regular Session, 2021, is reenacted and amended to

22 read as follows:

23 (6)AA"Electric utility" means a person or river

24 authority that owns or operates for compensation in this state

88R21632 JXC-F 1
1 equipment or facilities to produce, generate, transmit,

2 distribute, sell, or furnish electricity in this state. The term

3 includes a lessee, trustee, or receiver of an electric utility and a

4 recreational vehicle park owner who does not comply with Subchapter

5 C, Chapter 184, with regard to the metered sale of electricity at

6 the recreational vehicle park. The term does not include:

7 (A)AAa municipal corporation;

8 (B)AAa qualifying facility;

9 (C)AAa power generation company;

10 (D)AAan exempt wholesale generator;

11 (E)AAa power marketer;

12 (F)AAa corporation described by Section 32.053 to

13 the extent the corporation sells electricity exclusively at

14 wholesale and not to the ultimate consumer;

15 (G)AAan electric cooperative;

16 (H)AAa retail electric provider;

17 (I)AAthis state or an agency of this state; [or]

18 (J)AAan entity operating under Section 39.360; or

19 (K)AAa person not otherwise an electric utility

20 who:

21 (i)AAfurnishes an electric service or

22 commodity only to itself, its employees, or its tenants as an

23 incident of employment or tenancy, if that service or commodity is

24 not resold to or used by others;

25 (ii)AAowns or operates in this state

26 equipment or facilities to produce, generate, transmit,

27 distribute, sell, or furnish electric energy to an electric

88R21632 JXC-F 2
1 utility, if the equipment or facilities are used primarily to

2 produce and generate electric energy for consumption by that

3 person;

4 (iii)AAowns or operates in this state a

5 recreational vehicle park that provides metered electric service in

6 accordance with Subchapter C, Chapter 184; [or]

7 (iv)AAowns or operates equipment used solely

8 to provide electricity charging service for consumption by an

9 alternatively fueled vehicle, as defined by Section 502.004,

10 Transportation Code; or

11 (v)AA[(iv)] is an electric generation

12 equipment lessor or operator.

13 SECTIONA1.03.AASection 31.002, Utilities Code, is amended by

14 amending Subdivisions (10), (15), (19), and (20) and adding

15 Subdivisions (15-a) and (18-a) to read as follows:

16 (10)AA"Power generation company":

17 (A)AAmeans a person, including a person who owns

18 or operates a distributed natural gas generation facility, that:

19 (i)A[(A)]AAgenerates electricity that is

20 intended to be sold at wholesale, including the owner or operator of

21 electric energy storage equipment or facilities to which Subchapter

22 E, Chapter 35, applies;

23 (ii)A[(B)]AAdoes not own a transmission or

24 distribution facility in this state other than an essential

25 interconnecting facility, a facility not dedicated to public use,

26 or a facility otherwise excluded from the definition of "electric

27 utility" under this section; and

88R21632 JXC-F 3
1 (iii)A[(C)]AAdoes not have a certificated

2 service area, although its affiliated electric utility or

3 transmission and distribution utility may have a certificated

4 service area; and

5 (B)AAdoes not include an entity operating under

6 Section 39.360.

7 (15)AA"Rate" includes:

8 (A)AAa compensation, tariff, charge, fare, toll,

9 rental, or classification that is directly or indirectly demanded,

10 observed, charged, or collected by an electric utility for a

11 service, product, or commodity described in the definition of

12 electric utility in this section and a rule, practice, or contract

13 affecting the compensation, tariff, charge, fare, toll, rental, or

14 classification that must be approved by a regulatory authority; or

15 (B)AATexas Energy Insurance Program charges.

16 (15-a)AA"Reliability asset" means a gas-fueled

17 generation asset with on-site fuel storage that is located in the

18 ERCOT power region and is owned and operated by an entity certified

19 under Section 39.360 for the purpose of providing power when

20 dispatched under Section 38.079.

21 (18-a)AA"Texas Energy Insurance Program" means the

22 program established under Section 39.360.

23 (19)AA"Transmission and distribution utility" means a

24 person or river authority that owns or operates for compensation in

25 this state equipment or facilities to transmit or distribute

26 electricity, except for facilities necessary to interconnect a

27 generation facility with the transmission or distribution network,

88R21632 JXC-F 4
1 a facility not dedicated to public use, or a facility otherwise

2 excluded from the definition of "electric utility" under this

3 section, in a qualifying power region certified under Section

4 39.152, but does not include a municipally owned utility, [or] an

5 electric cooperative, or an entity operating under Section 39.360.

6 (20)AA"Transmission service" includes construction or

7 enlargement of facilities, transmission over distribution

8 facilities, control area services, scheduling resources,

9 regulation services, reactive power support, voltage control,

10 provision of operating reserves, and any other associated

11 electrical service the commission determines appropriate, except

12 that, on and after the implementation of customer choice, control

13 area services, scheduling resources, regulation services,

14 provision of operating reserves, and reactive power support,

15 voltage control, [and] other services provided by generation

16 resources, and services provided by an entity operating under

17 Section 39.360 are not "transmission service."

18 SECTIONA1.04.AASection 33.001, Utilities Code, is amended by

19 adding Subsection (b) to read as follows:

20 (b)AAThe governing body of a municipality does not have

21 jurisdiction over the Texas Energy Insurance Program.

22 SECTIONA1.05.AASection 33.008(a), Utilities Code, is amended

23 to read as follows:

24 (a)AAFollowing the end of the freeze period for a

25 municipality that has been served by an electric utility, and

26 following the date a municipally owned utility or an electric

27 cooperative has implemented customer choice for a municipality that

88R21632 JXC-F 5
1 has been served by that municipally owned utility or electric

2 cooperative, a municipality may impose on an electric utility,

3 transmission and distribution utility, municipally owned utility,

4 or electric cooperative, as appropriate, that provides

5 distribution service within the municipality a reasonable charge as

6 specified in Subsection (b) for the use of a municipal street,

7 alley, or public way to deliver electricity to a retail customer. A

8 municipality may not impose a charge on:

9 (1)AAan electric utility, or transmission and

10 distribution utility, municipally owned utility, or electric

11 cooperative for electric service provided outside the

12 municipality;

13 (2)AAa qualifying facility;

14 (3)AAan exempt wholesale generator;

15 (4)AAa power marketer;

16 (5)AAa retail electric provider;

17 (6)AAa power generation company;

18 (7)AAa person that generates electricity on and after

19 January 1, 2002; [or]

20 (8)AAan aggregator, as that term is defined by Section

21 39.353; or

22 (9)AAan entity operating under Section 39.360.

23 SECTIONA1.06.AASection 35.004, Utilities Code, is amended by

24 amending Subsections (b) and (c) and adding Subsection (i) to read

25 as follows:

26 (b)AAThe commission shall ensure that an electric utility or

27 transmission and distribution utility provides nondiscriminatory

88R21632 JXC-F 6
1 access to wholesale transmission service for qualifying

2 facilities, exempt wholesale generators, power marketers, power

3 generation companies, retail electric providers, entities

4 operating under Section 39.360, and other electric utilities or

5 transmission and distribution utilities.

6 (c)AAWhen an electric utility, electric cooperative, or

7 transmission and distribution utility provides wholesale

8 transmission service within ERCOT at the request of a third party,

9 the commission shall ensure that the utility recovers the utility ’s

10 reasonable costs in providing wholesale transmission services

11 necessary for the transaction from the entity for which the

12 transmission is provided so that the utility ’s other customers do

13 not bear the costs of the service. An entity operating under

14 Section 39.360 is not a third party for the purposes of this

15 subsection.

16 (i)AAServices provided by reliability assets when dispatched

17 under Section 38.079 are not considered to be ancillary services.

18 SECTIONA1.07.AASection 35.005, Utilities Code, is amended by

19 amending Subsection (a) and adding Subsections (d), (e), (f), (g),

20 and (h) to read as follows:

21 (a)AAThe commission may require an electric utility to

22 provide transmission service at wholesale to another electric

23 utility, a qualifying facility, an exempt wholesale generator, an

24 entity operating under Section 39.360, or a power marketer and may

25 determine whether terms for the transmission service are

26 reasonable.

27 (d)AATo ensure customers in the ERCOT power region can

88R21632 JXC-F 7
1 receive promptly the benefits associated with the Texas Energy

2 Insurance Program, the independent organization certified under

3 Section 39.151 for the ERCOT power region shall work with electric

4 utilities to ensure that each reliability asset is fully

5 interconnected in the ERCOT power region not later than the date the

6 reliability asset is ready for commercial operation. The

7 independent organization certified under Section 39.151 for the

8 ERCOT power region shall give priority to interconnecting each

9 reliability asset. An electric utility that enters into an

10 interconnection agreement for a reliability asset shall give

11 priority to interconnecting the reliability asset and complete

12 construction of any facilities necessary to interconnect the

13 reliability asset not later than the date the reliability asset is

14 ready for commercial operation.

15 (e)AAIf the commission receives an application under Chapter

16 37 for a certificate of convenience and necessity related to

17 facilities necessary to interconnect a reliability asset, as

18 described by Subsection (d), and does not approve the application

19 before the 90th day after the date the commission received the

20 application, the deadline established by Subsection (d) is extended

21 one day for each day after the 90th day in which the commission does

22 not approve the application.

23 (f)AAThe commission may extend the deadline established by

24 Subsection (d) after notice, hearing, and a determination on a

25 showing of good cause that fully interconnecting the reliability

26 asset before the deadline is not feasible.

27 (g)AAA transmission facility constructed to interconnect a

88R21632 JXC-F 8
1 reliability asset, as described by Subsection (d), is considered to

2 be necessary for the service, accommodation, convenience, or safety

3 of the public for the purposes of Chapter 37.

4 (h)AAThe commission shall permit an electric utility that

5 constructs and operates interconnecting facilities for a

6 reliability asset to recover the reasonable and necessary costs

7 incurred to interconnect the reliability asset.

8 SECTIONA1.08.AASection 36.001, Utilities Code, is amended by

9 adding Subsection (c) to read as follows:

10 (c)AAThe commission may regulate the rates of certified

11 entities in the Texas Energy Insurance Program related to each

12 reliability asset only to the extent provided by Subchapter K. No

13 other provision of this chapter applies to rates related to a

14 reliability asset.

15 SECTIONA1.09.AAChapter 36, Utilities Code, is amended by

16 adding Subchapter K to read as follows:

17 SUBCHAPTER K. TEXAS ENERGY INSURANCE PROGRAM

18 Sec.A36.501.AAPROGRAM RATES. (a) If sufficient funding for

19 the Texas Energy Insurance Program is not available from state

20 money, the commission shall set a nonbypassable rate that must be

21 charged by transmission and distribution utilities, municipally

22 owned utilities, and electric cooperatives in the ERCOT power

23 region to provide funding for the Texas Energy Insurance Program.

24 The transmission and distribution utilities, municipally owned

25 utilities, and electric cooperatives shall:

26 (1)AAcharge the nonbypassable rate to their respective

27 customers or, as appropriate, bill the customer ’s retail electric

88R21632 JXC-F 9
1 provider; and

2 (2)AAremit to the independent organization certified

3 under Section 39.151 for the ERCOT power region each month the rate

4 revenue received under Subdivision (1).

5 (b)AAThe independent organization certified under Section

6 39.151 for the ERCOT power region shall remit the rate revenue

7 received under Subsection (a)(2) to the comptroller.

8 (c)AAThe nonbypassable rate required by Subsection (a) must

9 be based on all reliability asset rates approved under this

10 section.

11 (d)AAThe commission shall set just and reasonable rates for

12 each entity operating under Section 39.360 for constructing,

13 owning, operating, and maintaining reliability assets. The rates

14 must:

15 (1)AAexcept as provided by Subdivision (2), be based on

16 the entity ’s just and reasonable costs of providing service,

17 including variable costs, allowance for funds used during

18 construction, and all costs of constructing, owning, operating, and

19 maintaining reliability assets, subject to:

20 (A)AAthe rate of return on equity accepted by the

21 entity under Section 39.360(h)(1); and

22 (B)AAthe total cost of reliability assets accepted

23 by the entity under Section 39.360(h)(2); and

24 (2)AAensure that a certified entity does not receive

25 more than $100 million per year in revenue per gigawatt of installed

26 generation capacity operated by the entity in the program.

27 (e)AAIn addition to the considerations required by

88R21632 JXC-F 10
1 Subsection (d), the commission shall consider the following

2 parameters when setting reliability asset rates for a certified

3 entity:

4 (1)AAthe entity ’s capital financing structure,

5 including:

6 (A)AAthe capital financing structure of any

7 corporation owned by or affiliated with the entity; and

8 (B)AAthe entity ’s debt-to-equity ratio, including

9 any debt of the corporate parent that is used to fund any part of the

10 entity ’s equity;

11 (2)AAa 40-year depreciable life;

12 (3)AAallowance for funds used during construction;

13 (4)AAcosts associated with ownership, operations,

14 maintenance, fuel, and other variable costs;

15 (5)AAreasonably incurred attorney ’s fees; and

16 (6)AAthe estimated costs of constructing the

17 reliability asset before construction has begun and, after the

18 reliability asset is complete, the actual cost of the asset.

19 (f)AANot later than the 185th day after the date a certified

20 entity submits to the commission a rate request for a reliability

21 asset, the commission shall set the reliability asset rate. The

22 commission shall incorporate the approved rate into the

23 commission ’s calculations of the nonbypassable rate under

24 Subsection (a) and require the newly calculated nonbypassable rate

25 to be collected beginning on the date the reliability asset is

26 commissioned.

27 (g)AAThe comptroller shall disburse in monthly amounts

88R21632 JXC-F 11
1 determined by the commission to each certified entity for which the

2 commission has set a reliability asset rate under this section the

3 rate revenue to which the certified entity is entitled.

4 (h)AANot later than the 185th day after the commercial

5 operation date of a reliability asset, the commission shall:

6 (1)AAadjust the previously established rates for the

7 asset to reflect the actual construction costs if the commission

8 determines those costs were prudently incurred; and

9 (2)AAin collaboration with the independent

10 organization certified under Section 39.151 for the ERCOT power

11 region, reconcile any over-collections or under-collections.

12 (i)AAThe commission shall adjust the rates for each

13 reliability asset annually to reflect changes to the costs of

14 ownership, operations and maintenance, and variable costs,

15 including fuel costs and interest rates. The adjustment must be

16 based on an annual filing by the certified entity that shows the

17 actual costs the entity incurred over the preceding year. The

18 commission shall apply any market revenues earned by the certified

19 entity for the operation of the reliability asset under Section

20 38.079 in the prior year as an offset to the rates. The review for a

21 rate adjustment under this subsection is limited to verifying the

22 accuracy of the incurred costs, the reconciliation of any

23 over-collections or under-collections, and the calculation of the

24 rates. A certified entity is not entitled to recover more than $10

25 million per year for a single capital cost unless the commission

26 approves the cost before the entity incurs the cost.

27 Sec.A36.502.AASTRANDED COST RECOVERY. The commission by

88R21632 JXC-F 12
1 rule shall establish a process to allow certified entities in the

2 Texas Energy Insurance Program to recover stranded costs if the

3 Texas Energy Insurance Program is repealed or lacks sufficient

4 funding.

5 SECTIONA1.10.AASubchapter D, Chapter 38, Utilities Code, is

6 amended by adding Section 38.079 to read as follows:

7 Sec.A38.079.AATEXAS ENERGY INSURANCE PROGRAM. (a)

8 Reliability assets may be dispatched by the independent

9 organization certified under Section 39.151 for the ERCOT power

10 region in a manner that minimizes wholesale electric market

11 effects. Dispatch may occur:

12 (1)AAwhen the independent organization determines that

13 without generation by a regional reliability asset, an overload of

14 a transmission system element will result in load shed for that

15 region;

16 (2)AAwhen the independent organization determines that

17 the operation of a reliability asset is needed to resolve an actual

18 or anticipated violation of transmission security criteria;

19 (3)AAas a last resort to avoid ordering involuntary

20 load shedding; and

21 (4)AAfor not more than 336 hours per year for testing

22 purposes and as directed by the independent organization.

23 (b)AAThe commission shall require the independent

24 organization to:

25 (1)AAdevelop deployment criteria and protocols for

26 reliability assets, including a maximum notice time for deployment,

27 minimum run times, and other operational requirements needed to

88R21632 JXC-F 13
1 support reliability; and

2 (2)AAallow the state to collect revenue under Section

3 36.501(b) but ensure that reliability assets do not participate in

4 the day-ahead or real-time ERCOT markets.

5 (c)AAThe commission shall address long-term resource

6 adequacy and investment in the wholesale electric market in

7 conjunction with implementation of the Texas Energy Insurance

8 Program.

9 SECTIONA1.11.AASection 39.154, Utilities Code, is amended by

10 adding Subsection (f) to read as follows:

11 (f)AAFor purposes of this section and Section 39.158, a

12 reliability asset is not considered to be installed generation

13 capacity.

14 SECTIONA1.12.AASection 39.155, Utilities Code, is amended by

15 amending Subsections (a) and (b) and adding Subsection (e) to read

16 as follows:

17 (a)AAEach person, municipally owned utility, electric

18 cooperative, and river authority that owns generation facilities

19 and offers electricity for sale in this state, other than an entity

20 operating under Section 39.360, shall report to the commission its

21 installed generation capacity, the total amount of capacity

22 available for sale to others, the total amount of capacity under

23 contract to others, the total amount of capacity dedicated to its

24 own use, its annual wholesale power sales in the state, its annual

25 retail power sales in the state, and any other information

26 necessary for the commission to assess market power or the

27 development of a competitive retail market in the state. The

88R21632 JXC-F 14
1 commission shall by rule prescribe the nature and detail of the

2 reporting requirements and shall administer those reporting

3 requirements in a manner that ensures the confidentiality of

4 competitively sensitive information.

5 (b)AAThe ERCOT independent system operator shall submit an

6 annual report to the commission identifying existing and potential

7 transmission and distribution constraints and system needs within

8 ERCOT, alternatives for meeting system needs, and recommendations

9 for meeting system needs. The first report shall be submitted on or

10 before October 1, 1999. Subsequent reports shall be submitted by

11 January 15 of each year or as determined necessary by the

12 commission. The reports required by this subsection must include a

13 section identifying existing and potential transmission

14 constraints that could affect the availability of any reliability

15 asset and include alternatives for meeting identified needs.

16 (e)AAEntities operating under Section 39.360 are not

17 considered to have market power when dispatched by an order of the

18 independent organization certified under Section 39.151 for the

19 ERCOT power region.

20 SECTIONA1.13.AASubchapter H, Chapter 39, Utilities Code, is

21 amended by adding Section 39.360 to read as follows:

22 Sec.A39.360.AACERTIFICATION OF TEXAS ENERGY INSURANCE

23 PROGRAM. (a) The commission may certify one or more entities to

24 operate as participants in the Texas Energy Insurance Program by

25 owning and operating reliability assets. The commission may

26 certify any number of entities to operate any number of reliability

27 assets, but may not certify a total of more than 10 gigawatts of

88R21632 JXC-F 15
1 generating capacity for the entire Texas Energy Insurance Program.

2 (b)AAAn entity may not operate as part of the Texas Energy

3 Insurance Program unless the entity is certified by the commission

4 under this section.

5 (c)AAThe commission shall:

6 (1)AAissue at least one request for proposals from

7 qualified applicants to serve as part of the Texas Energy Insurance

8 Program; and

9 (2)AAif the commission receives at least two

10 applications from qualified applicants in response to the request

11 described by Subdivision (1) before the expiration of the period

12 provided by Subsection (e), select and certify at least two

13 qualified applicants not later than the 90th day after the date the

14 commission issues the request.

15 (d)AATo ensure efficient distribution of reliability assets,

16 the commission may designate regions in the ERCOT power region and

17 issue requests for proposals under Subsection (c) for specific

18 amounts of generation capacity by region.

19 (e)AAAn applicant must submit an application under

20 Subsection (c) not later than the 60th day after the date the

21 commission issues a request for proposals under that subsection.

22 (f)AAAn entity that is prohibited by this title from owning

23 or operating a generation asset may apply to be certified to be part

24 of the Texas Energy Insurance Program under this section.

25 (g)AATo be certified as part of the Texas Energy Insurance

26 Program, an applicant must:

27 (1)AAestablish financial stability and expertise by

88R21632 JXC-F 16
1 demonstrating that:

2 (A)AAthe applicant or the applicant ’s parent

3 company or operating partner has an investment grade credit rating;

4 and

5 (B)AAthe applicant or the applicant ’s parent

6 company or operating partner is able to fund the investment as

7 demonstrated by proof of access to adequate financing;

8 (2)AAestablish industry expertise by demonstrating

9 that the applicant is a river authority that owns or operates

10 generation facilities, an electric utility, a municipally owned

11 utility, or an electric cooperative, or the applicant or the

12 applicant ’s parent company owns or operates electric generation

13 assets totaling at least 2,500 megawatts;

14 (3)AAestablish project quality standards by

15 demonstrating that:

16 (A)AAthe applicant is able to provide a parent

17 performance guarantee that the independent organization certified

18 under Section 39.151 for the ERCOT power region or the commission

19 may draw upon during each season, as defined by the independent

20 organization, if a reliability asset does not perform and

21 performance is not excused under Subsection (m), in the amount of

22 $400 million for every gigawatt of generating capacity for which

23 the applicant is applying to be certified; and

24 (B)AAeach reliability asset will be weatherized,

25 capable of starting up and generating electricity without requiring

26 outside power or support from the grid, and in operation not later

27 than the last day of the 48th month after certification, unless

88R21632 JXC-F 17
1 interconnection delays require a later operation date; and

2 (4)AApledge:

3 (A)AAthat any net revenue earned during testing or

4 operating would be for the benefit of the ERCOT power region; and

5 (B)AAnot to sell any reliability asset over the

6 life of the reliability asset while the applicant is certified as

7 part of the Texas Energy Insurance Program without prior approval

8 of the commission.

9 (h)AAEach applicant must provide in the application a

10 statement:

11 (1)AAagreeing to a rate of return on equity the

12 applicant will accept while operating as part of the Texas Energy

13 Insurance Program, which may not exceed 10 percent;

14 (2)AAof the total cost of reliability assets for which

15 the applicant will request recovery under Subchapter K, Chapter 36,

16 while operating as part of the Texas Energy Insurance Program,

17 which may not exceed $1 billion per gigawatt of installed

18 generation capacity operated in the program; and

19 (3)AAagreeing to the rates and revenues authorized

20 under Subchapter K, Chapter 36.

21 (i)AAThe commission may certify an entity to be part of the

22 Texas Energy Insurance Program if the entity submits a qualifying

23 application that includes:

24 (1)AAproof that the requirements of Subsection (g) have

25 been met;

26 (2)AAa description of the location or proposed location

27 of each reliability asset;

88R21632 JXC-F 18
1 (3)AAa commitment to construct, own, operate, and

2 maintain reliability assets for a time period not less than the

3 useful life of the assets;

4 (4)AAa commitment that the reliability assets will

5 include at each site resources to allow the provision of generation

6 at full load for at least 168 continuous hours or the maximum number

7 of continuous hours authorized for continuous operation under

8 permits issued under state and federal law;

9 (5)AAan affidavit affirming that the reliability assets

10 will be available to dispatch in a manner that provides the

11 independent organization certified under Section 39.151 for the

12 ERCOT power region, in times of emergency, natural disaster, and

13 testing, with access to power at full output for up to seven

14 consecutive days, after accounting for ramp up and ramp down times

15 required by the independent organization;

16 (6)AAproof of the posting of a parent performance

17 guarantee that the independent organization certified under

18 Section 39.151 for the ERCOT power region or the commission may draw

19 upon during each season, as defined by the independent

20 organization, if a reliability asset does not perform and

21 performance is not excused under Subsection (m), in the amount of

22 $400 million for every gigawatt of generating capacity for which

23 the applicant is applying to be certified;

24 (7)AAproof that the applicant or the applicant ’s parent

25 company or operating partner meets the requirements of Subsection

26 (g)(1); and

27 (8)AAproof that the applicant can follow telemetry from

88R21632 JXC-F 19
1 the independent organization certified under Section 39.151 for the

2 ERCOT power region.

3 (j)AAThe commission shall provide a process to amend a

4 certificate to account for the addition of any new reliability

5 asset.

6 (k)AAThe commission may not revoke a certificate unless after

7 notice and an opportunity for hearing before the commission, the

8 commission finds that the certified entity:

9 (1)AAfailed to dispatch sufficient energy from

10 reliability assets when called upon by the independent organization

11 certified under Section 39.151 for the ERCOT power region or the

12 commission and the failure cannot be excused by factors outside the

13 entity ’s control;

14 (2)AAhas not fulfilled commitments made in the entity ’s

15 application or complied with statutory or regulatory requirements

16 of being certified, after reasonable notice from the commission; or

17 (3)AAno longer meets the eligibility requirements for

18 participating in the Texas Energy Insurance Program, unless the

19 entity has presented an actionable plan acceptable to the

20 commission to meet the requirements.

21 (l)AAEach certified entity shall comply with the

22 commissioning requirements and reliability standards adopted by

23 the independent organization certified under Section 39.151 for the

24 ERCOT power region to ensure the reliability of the ERCOT region.

25 (m)AAThe commission or the independent organization

26 certified under Section 39.151 for the ERCOT power region may not

27 draw upon a parent performance guarantee provided by a certified

88R21632 JXC-F 20
1 entity and may not impose a fine or penalty on a certified entity

2 for failure to provide service to the extent that the inability to

3 provide service is the result of:

4 (1)AAthe actions of a transmission service provider

5 related to transmission service; or

6 (2)AAthe actions of the independent organization

7 certified under Section 39.151 for the ERCOT power region,

8 including scheduled routine maintenance.

9 (n)AAThe commission may not require a bond, letter of credit,

10 or other security from a certified entity except for a parent

11 performance guarantee described by this section and may not require

12 the expansion of a parent performance guarantee. If drawn upon, a

13 parent performance guarantee may not be required to be replenished

14 or expanded. If the parent performance guarantee for a reliability

15 asset is exhausted, the commission may decertify the certified

16 entity to operate the asset. The commission may consult with the

17 Legislative Budget Board in implementing this subsection.

18 (o)AAA certification issued under this section may be

19 transferred only with the prior approval of the commission. Before

20 transferring ownership of a reliability asset to another entity, a

21 certified entity must apply to the commission for permission to

22 transfer the asset. The commission may not approve the transfer of

23 a reliability asset that is sold unless the sale is conditioned on

24 the purchaser owning, operating, and maintaining the asset for the

25 duration of the commitment made under Subsection (i)(3). A

26 transfer of a reliability asset under this subsection does not

27 affect the participation of the asset in the Texas Energy Insurance

88R21632 JXC-F 21
1 Program. If the commission does not approve the transfer and the

2 entity sells the asset, the commission shall decertify the entity

3 to operate that asset as part of the Texas Energy Insurance Program.

4 (p)AAOn the request of a certified entity, after the 40th

5 anniversary of the commissioning date of a reliability asset, the

6 commission shall decertify the entity to operate the asset as a

7 reliability asset and allow the entity to apply to operate the asset

8 in the competitive market.

9 SECTIONA1.14.AASection 382.05155, Health and Safety Code, is

10 amended by adding Subsection (b-1) to read as follows:

11 (b-1)AAA permit for a reliability asset, as defined by

12 Section 31.002, Utilities Code, is considered to benefit the

13 economy of this state for the purposes of Subsection (b).

14 SECTIONA1.15.AANot later than February 1, 2024, the Public

15 Utility Commission of Texas shall issue a request for proposals

16 required by Section 39.360(c), Utilities Code, as added by this

17 article.

18 SECTIONA1.16.AAAThe Public Utility Commission of Texas shall

19 adopt any rules necessary to implement this article not later than

20 December 1, 2023.

21 SECTIONA1.17.AATo the extent of any conflict, this article

22 prevails over another Act of the 88th Legislature, Regular Session,

23 2023, relating to nonsubstantive additions to and corrections in

24 enacted codes.

25 SECTIONA1.18.AAThis article takes effect September 1, 2023.

26 ARTICLE 2. GENERATING FACILITY FUNDING

27 SECTIONA2.01.AASubtitle B, Title 2, Utilities Code, is

88R21632 JXC-F 22
1 amended by adding Chapter 34Ato read as follows:

2 CHAPTER 34. GENERATING FACILITY FUNDING

3 Sec.A34.0101.AADEFINITIONS. In this chapter:

4 (1)AA"Advisory committee" means the Texas Energy

5 Insurance Fund Advisory Committee.

6 (2)AA"Fund" means the Texas energy insurance fund

7 established by Section 49-q, Article III, Texas Constitution.

8 (3)AA"Trust company" means the Texas Treasury

9 Safekeeping Trust Company.

10 Sec.A34.0102.AAFUND. (a) The fund is a special fund in the

11 state treasury outside the general revenue fund to be administered

12 and used by the commission for the purposes authorized by this

13 chapter. The commission may establish separate accounts in the

14 fund.

15 (b)AAThe fund and the fund ’s accounts are kept and held by the

16 trust company for and in the name of the commission.

17 (c)AAMoney deposited to the credit of the fund may be used

18 only as provided by this chapter.

19 (d)AAThe fund consists of:

20 (1)AAmoney appropriated, credited, transferred, or

21 deposited to the credit of the fund by or as authorized by law,

22 including money from any source transferred or deposited to the

23 credit of the fund at the commission ’s discretion;

24 (2)AArevenue that the legislature by statute dedicates

25 for deposit to the credit of the fund;

26 (3)AAinvestment earnings and interest earned on money

27 in the fund; and

88R21632 JXC-F 23
1 (4)AAgifts, grants, and donations contributed to the

2 fund.

3 Sec.A34.0103.AALOANS FOR MAINTENANCE AND MODERNIZATION. (a)

4 The commission may use money in the fund without further

5 appropriation to provide loans to finance maintenance or

6 modernization of dispatchable electric generating facilities

7 operating in the ERCOT power region. For the purposes of this

8 section, a generating facility is considered to be dispatchable if

9 the facility ’s output can be controlled primarily by forces under

10 human control.

11 (b)AAEach year, the commission shall produce a list of

12 dispatchable electric generating facilities operating in the ERCOT

13 power region and estimate the potential costs to maintain and

14 modernize the facilities during the following five years. The

15 commission shall give priority to loan applications under this

16 section that the commission determines will provide the highest

17 ratio of dispatchable megawatts maintained to project costs.

18 (c)AAThe commission shall evaluate an application for a loan

19 under this section based on the applicant ’s:

20 (1)AAefforts and achievements in conserving resources;

21 (2)AAquality of services;

22 (3)AAefficiency of operations;

23 (4)AAquality of management;

24 (5)AAproposed improvement in availability of the

25 generation facility for which the loan is requested; and

26 (6)AAprevious Texas energy insurance fund loan history,

27 with a preference toward entities that have not applied for or been

88R21632 JXC-F 24
1 granted a loan previously.

2 (d)AAThe commission may provide a loan under this section

3 only for maintenance or modernization of a facility that is capable

4 of operating for at least five years after the date the loan is

5 received.

6 (e)AAProceeds of a loan received under this section may not

7 be used for:

8 (1)AAcompliance with weatherization standards adopted

9 after December 1, 2023;

10 (2)AAdebt payments; or

11 (3)AAexpenses not related to maintaining or modernizing

12 the electric generating facility.

13 (f)AAAn electric utility may not receive a loan under this

14 section.

15 (g)AAThe commission may require immediate repayment of a loan

16 issued under this section if the recipient of the loan stops

17 operating the facility for which the loan was received before the

18 fifth anniversary of the date on which the loan was disbursed.

19 (h)AAA loan provided under this chapter may not bear an

20 interest rate of more than zero percent.

21 (i)AAInformation submitted to the commission in an

22 application for a loan under this chapter is confidential and not

23 subject to disclosure under Chapter 552, Government Code.

24 Sec.A34.0104.AASOURCES OF MONEY FOR LOANS FOR TEXAS ENERGY

25 INSURANCE PROGRAM RELIABILITY ASSETS. The commission may use any

26 money appropriated to the commission for the purpose of providing a

27 loan, at zero percent interest, to an entity certified under

88R21632 JXC-F 25
1 Section 39.360 to be used to reduce debt associated with

2 constructing or operating a reliability asset. The commission may

3 use without legislative appropriation money from the fund for that

4 purpose.

5 Sec.A34.0105.AAMAXIMUM LOAN AMOUNT. If the commission has

6 more than four pending applications for loans to be made from the

7 fund on the date the commission awards a loan, the amount of the

8 loan awarded may not exceed 25 percent of the fund balance on that

9 date.

10 Sec.A34.0106.AAMANAGEMENT AND INVESTMENT OF FUND. (a) The

11 trust company shall hold the fund, and any accounts established in

12 the fund, for and in the name of the commission, taking into account

13 the purposes for which money in the fund may be used. The fund may

14 be invested with the state treasury pool and comingled with other

15 investments.

16 (b)AAThe overall objective for the investment of the fund is

17 to maintain sufficient liquidity to meet the needs of the fund while

18 striving to preserve the purchasing power of the fund.

19 (c)AAIn managing the assets of the fund, the trust company

20 may acquire, exchange, sell, supervise, manage, or retain any kind

21 of investment that a prudent investor, exercising reasonable care,

22 skill, and caution, would acquire or retain in light of the

23 purposes, terms, distribution requirements, and other

24 circumstances of the fund then prevailing, taking into

25 consideration the investment of all the assets of the fund rather

26 than a single investment.

27 (d)AAThe reasonable expenses of managing the fund ’s assets

88R21632 JXC-F 26
1 shall be paid from the fund.

2 (e)AAThe trust company annually shall provide a written

3 report to the commission and to the advisory committee with respect

4 to the investment of the fund.

5 (f)AAThe trust company shall adopt a written investment

6 policy that is appropriate for the fund. The trust company shall

7 present the investment policy to the investment advisory board

8 established under Section 404.028, Government Code. The investment

9 advisory board shall submit to the trust company recommendations

10 regarding the policy.

11 (g)AAThe commission annually shall provide to the trust

12 company a forecast of the cash flows into and out of the fund. The

13 commission shall provide updates to the forecasts as appropriate to

14 ensure that the trust company is able to achieve the objective

15 specified by Subsection (b).

16 (h)AAThe trust company shall disburse money from the fund as

17 directed by the commission.

18 Sec.A34.0107.AARECEIVERSHIP OF DEFAULT GENERATING FACILITY.

19 (a) In this section, "default" means:

20 (1)AAdefault in payment of the principal of or interest

21 on a loan; or

22 (2)AAa failure to perform any of the terms of a loan.

23 (b)AAThe state, including the commission, the advisory

24 committee, and the trust company, may not retain an ownership

25 interest in a project or facility for which a loan is provided under

26 this chapter.

27 (c)AAIn the event of a default on a loan made under this

88R21632 JXC-F 27
1 chapter, at the request of the commission, the attorney general

2 shall bring suit in a district court in Travis County for the

3 appointment of a receiver to collect the assets and carry on the

4 business of a loan recipient if the action is necessary to cure a

5 default by the recipient.

6 (d)AAThe court shall vest a receiver appointed by the court

7 with any power or duty the court finds necessary to cure the

8 default, including the power or duty to:

9 (1)AAperform audits;

10 (2)AAdirect ongoing operation of the assets;

11 (3)AAfund reserve accounts;

12 (4)AAmake payments of the principal of or interest on

13 bonds, securities, or other obligations; and

14 (5)AAtake any other action necessary to prevent or to

15 remedy the default, including the sale of assets.

16 (e)AAThe receiver shall execute a bond in an amount to be set

17 by the court to ensure the proper performance of the receiver ’s

18 duties.

19 (f)AAAfter appointment and execution of bond, the receiver

20 shall take possession of the books, records, accounts, and assets

21 of the defaulting loan recipient specified by the court. Until

22 discharged by the court, the receiver shall perform the duties that

23 the court directs and shall strictly observe the final order

24 involved.

25 (g)AAOn a showing of good cause by the defaulting loan

26 recipient, the court may dissolve the receivership.

27 Sec.A34.0108.AATEXAS ENERGY INSURANCE FUND ADVISORY

88R21632 JXC-F 28
1 COMMITTEE. (a) The advisory committee is composed of the following

2 six members:

3 (1)AAthree members of the senate appointed by the

4 lieutenant governor, including:

5 (A)AAa member of the committee of the senate

6 having primary jurisdiction over matters relating to the generation

7 of electricity; and

8 (B)AAa member of the committee of the senate

9 having primary jurisdiction over finance; and

10 (2)AAthree members of the house of representatives

11 appointed by the speaker of the house of representatives,

12 including:

13 (A)AAa member of the committee of the house of

14 representatives having primary jurisdiction over the generation of

15 electricity; and

16 (B)AAa member of the committee of the house of

17 representatives having primary jurisdiction over finance.

18 (b)AAA member of the advisory committee serves at the will of

19 the person who appointed the member.

20 (c)AAThe lieutenant governor shall appoint a co-presiding

21 officer of the advisory committee from among the members appointed

22 by the lieutenant governor. The speaker of the house of

23 representatives shall appoint a co-presiding officer of the

24 advisory committee from among the members appointed by the speaker.

25 (d)AAThe advisory committee may hold public hearings, formal

26 meetings, and work sessions. Either co-presiding officer of the

27 advisory committee may call a public hearing, formal meeting, or

88R21632 JXC-F 29
1 work session of the advisory committee at any time. The advisory

2 committee may not take formal action at a public hearing, formal

3 meeting, or work session unless a quorum of the committee is

4 present.

5 (e)AAExcept as otherwise provided by this subsection, a

6 member of the advisory committee is not entitled to receive

7 compensation for service on the committee or reimbursement for

8 expenses incurred in the performance of official duties as a member

9 of the committee. Service on the advisory committee by a member of

10 the senate or house of representatives is considered legislative

11 service for which the member is entitled to reimbursement and other

12 benefits in the same manner and to the same extent as for other

13 legislative service.

14 (f)AAThe advisory committee:

15 (1)AAmay provide comments and recommendations to the

16 commission for the commission to use in adopting rules regarding

17 the use of the fund or on any other matter; and

18 (2)AAshall review the overall operation, function, and

19 structure of the fund at least semiannually.

20 (g)AAThe advisory committee may adopt rules, procedures, and

21 policies as needed to administer this section and implement its

22 responsibilities.

23 (h)AAChapter 2110, Government Code, does not apply to the

24 size, composition, or duration of the advisory committee.

25 (i)AAThe advisory committee is subject to Chapter 325,

26 Government Code (Texas Sunset Act). Unless continued in existence

27 as provided by that chapter, the advisory committee is abolished

88R21632 JXC-F 30
1 September 1, 2035.

2 Sec.A34.0109.AARULES. (a) The commission by rule may

3 establish procedures for:

4 (1)AAthe application for and award of a loan under this

5 chapter; and

6 (2)AAthe administration of the fund.

7 (b)AAThe commission shall give full consideration to

8 comments and recommendations of the advisory committee before the

9 commission adopts rules under this chapter.

10 Sec.A34.0110.AATEXAS ENERGY INSURANCE PROGRAM CUSTOMER

11 PAYMENTS. (a) The commission may use any money appropriated to the

12 commission for the purpose of offsetting amounts owed to certified

13 entities under Section 36.501 on behalf of customers of

14 transmission and distribution utilities, municipally owned

15 utilities, and electric cooperatives. The commission may use

16 without legislative appropriation money from the fund for that

17 purpose.

18 (b)AAThe comptroller shall deposit revenue received under

19 Section 36.501(b) to the credit of the fund.

20 (c)AAMoney obtained by the independent organization

21 certified under Section 39.151 for the ERCOT power region or the

22 commission through drawing upon a parent performance guarantee as

23 described by Section 39.360(g)(3) must be deposited to the credit

24 of the fund.

25 (d)AAThe comptroller shall make the disbursements required

26 by Section 36.501(g) from the fund.

27 SECTIONA2.02.AAThis article takes effect on the date on which

88R21632 JXC-F 31
1 the constitutional amendment proposed by the 88th Legislature,

2 Regular Session, 2023, providing for the creation of the Texas

3 energy insurance fund and the authorization of other funding

4 mechanisms to support the construction and operation of electric

5 generating facilities takes effect. If that amendment is not

6 approved by the voters, this article has no effect.

88R21632 JXC-F 32