82nd Texas Legislature: New Changes in the Texas Electric Industry

Click here to download a PDF of this issue paper.

The electric industry will undergo several changes as bills passed by the 82nd Texas Legislature go into effect. Texans will benefit from improved processes related to utility ratemaking processes, continued environmental oversight, improved reliability and other initiatives.

Meanwhile, the competitive electric market within the Electric Reliability Council of Texas (ERCOT) region maintains the framework that has resulted in billions of dollars in investment, dozens of choices for retail customers and the vigorous competition needed to bring market prices to consumers. Click below to learn more about bills that passed during the regular session.

Periodic Rate Adjustments for Electric Utilities

SB 1693 (Carona; House Sponsor:  Thompson) promotes continued investment in the Texas electric grid by improving the state’s ratemaking system for distribution related investment.  The bill will allow the PUC to create a framework where utilities that agree to annual rate audits can more rapidly recover routine capital investments.  In addition to reducing potential rate shock for customers, this regulatory change will allow utilities to better:

  • Serve our state’s growing population;
  • Support economic development opportunities and employment growth;
  • Facilitate small-scale and customer-owned generation and new technologies, such as electric vehicles; and
  • Improve and replace low voltage power lines and facilities to ensure continued safety and reliability.

Oversight of Texas’ Electric Market

SB 652 (Hegar; Senate Sponsor: Bonnen), the Sunset safety net bill, continues the PUC until 2013, during which it will undergo a limited purpose Sunset review. The bill requires ERCOT to be reviewed concurrent with the PUC, after 2013. The Railroad Commission of Texas will also be reviewed in 2013 and the Office of Public Utility Counsel will be continued until 2023.

Oversight of Environmental Performance of Power Plants

HB 2694 (W. Smith; Senate Sponsor: Huffman), the TCEQ Sunset bill, continues the agency for 12 years. Among other provisions, the legislation:

  • Establishes a program to provide assistance and education to the public;
  • Increases maximum penalties for violations;
  • Authorizes use of supplemental environmental projects;
  • Revises the Regulatory Flexibility Program;
  • Increases TCEQ authority over regulatory tanks and dams;
  • Revises the Texas Low-Level Radioactive Waste Disposal Compact Commission’s funding mechanism; and
  • Increases access to water rate case information.

Moreover, HB 2694 continues the TCEQ’s mission to successfully balance the environmental and economic needs of the state.

HB 1981 (W. Smith; Senate Sponsor: Gallegos) establishes statutory guidelines and requirements for creation of an air pollutant watch list at the TCEQ, identifying areas in Texas where specific pollutants are measured at levels of concern. The bill also requires the TCEQ to develop the capacity for electronic reporting and to incorporate reported emissions events into a permanent online centralized database for emissions events. It also requires the TCEQ to notify the relevant state senator or representative of an emissions event that could endanger human health or the environment within four hours of receipts of the original notification.

Competitive Market Changes

 HB 2133 (Solomons; Senate Sponsor: Fraser) requires the PUC to, when assessing a penalty, order disgorgement of all revenues resulting from a market power violation. This is an increase in the PUC’s enforcement authority, joining existing powers, such as the PUC’s ability to assess substantial administrative penalties and to terminate a market participant’s license to do business in the ERCOT market.

Reliability of the Electric System

SB 1133 (Hegar; House Sponsor: Harless) requires electric generators to provide emergency operations plans to the PUC and ERCOT. Those agencies must then prepare a report to state officials regarding the weather emergency preparedness of generators in the state. Subsequent reports would be submitted when significant changes to weatherization techniques have occurred. The PUC will review and analyze plans and can require generators to file updated emergency plans if they are deemed inadequate.

SB 937 (Lucio; House Sponsor: Naishtat) requires the PUC to establish a rule that prioritizes nursing homes, assisted living facilities and hospice facilities for power restoration. The intent is to help ensure these critical facilities have power returned quickly following a major storm or other extended outage. The legislation requires that any rule by the PUC will allow an electric utility to exercise the utility’s discretion to prioritize power restoration for a facility in accordance with the facility’s needs, and with the characteristics of the geographic area in which power must be restored.

Energy Efficiency and Renewables

SB 1125 (Carona; House Sponsor: Anchia) alters the state’s energy efficiency goal, requiring each utility, subject to certain cost constraints, to transition its goals from a percentage of load growth to a goal of reducing its peak demand by 0.4%. By focusing on peak demand, energy efficiency metrics can more effectively reduce the need for new generation.

SB 981 (Carona; House Sponsor: Anchia) provides an important clarification regarding ownership and registration of distributed generation (such as solar power), ensuring that those who install DG on their side of the meter, which will provide equal to or less than their estimated annual usage at the time of installation, will not be considered a power company, and thus do not need to register with the PUC.

SB 1434 (Carona; House Sponsor: Geren) requires the PUC to ensure that annual expenditures for the low-income income energy efficiency programs of each unbundled transmission and distribution utility (TDU) are not less than 10 percent of the TDU’s energy efficiency budget for the year. The PUC will participate in proceedings to establish an energy efficiency cost recovery factor to ensure that targeted low-income weatherization programs are consistent with federal weatherization programs and adequately funded. It will also issue an annual report that summarizes the performance of the program.

Oversight and Regulation

HB 1064 (Pitts; Senate Sponsor: Carona) requires the PUC to adopt rules regarding demand ratchet waivers for distribution service to customers that would waive the application of demand ratchet provisions for each nonresidential secondary service customer with a load factor below that set by the PUC. The bill is designed to address cost pressures faced by organizations that have limited or seasonal usage, such as schools, little league organizations and fairs.

Under SB 855 (Duncan; House Sponsor: Hilderbran), the Office of Public Utility Counsel (OPUC) may advise interested parties on procedural matters related to certificate of convenience and necessity proceedings before the PUC involving routing of power lines.

HB 971 (P. King; Senate Sponsor: Fraser) allows the PUC to no longer require an applicant for a certificate of convenience and necessity to designate a preferred route for a proposed transmission line facility. This helps ensure all potentially affected landowners are involved in the CCN process. It also clarifies existing law concerning a utility’s right to condemn certain public land.

SB 1910 by Rodriguez (Sponsor: Margo) brings El Paso Electric Company (EPE) up to date with all other Texas utilities located outside ERCOT by establishing its own Utilities Code subchapter. It codifies existing PUC rules relating to the transition to competition in the region. It also creates optional metering rules specific to the region, and allows EPE to directly market energy efficiency and renewable energy programs to its Texas customers.

Under SB 1153 (Williams; House Sponsor: Ritter), the PUC will be allowed to retain attorneys and other experts to represent the commission in proceedings before the Federal Energy Regulatory Commission (FERC) and in the courts on matters related to power regions, regional transmission organizations or independent system operators. This role is specific to the East Texas region served by Entergy Texas, and syncs with legislation in Arkansas and Louisiana.

SB 1504 (Seliger; House Sponsor: Lewis) will enable the disposal of low-level radioactive waste (LLRW) (including waste that is imported from non-Compact states [e.g., states other than Texas or Vermont]) as soon as construction of the disposal facility in Andrews County is completed in late 2011. By ensuring disposal operations can begin as soon as construction is complete, SB 1504 should ensure the financial viability of the Andrews County facility and should result in substantial revenue for the state of Texas. The Legislative Budget Board estimates $32 million for the state in fiscal years 2012-2013. Additionally, SB 1504 provides for appropriate protections to ensure that there is sufficient storage capacity at the facility for Compact waste (including Texas waste) and to ensure that the storage rates for Compact waste are appropriately set by the TCEQ.

Click here to download a PDF of this issue paper.

  1. The change to HB981 just makes good sense. My blog focuses on solar power which I think has a lot of advantages – specially here in Texas. This bill will make it easier to install a localized power source (at the home) which will reduce the dependence on the power generating stations and the transmission grid. Solar power is a good solution for everyone involved.

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