SB388 - Relating to the legislature's goals for electric generation capacity in this state.

      By: King, Bettencourt S.B. No. 388       Kolkhorst     A BILL TO BE ENTITLED   AN ACT   relating to the legislature's goals for electric generation   capacity in this state.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 39.9044, Utilities Code, is amended to   read as follows:          Sec. 39.9044.  GOAL FOR DISPATCHABLE GENERATION [ NATURAL   GAS ]. (a) It is the intent of the legislature that 50 percent of   the megawatts of generating capacity installed in the ERCOT power   region [ this state ] after January 1, 2026 [ 2000 ], be sourced from   dispatchable generation other than battery energy storage  [ use   natural gas ]. [ To the extent permitted by law, the commission shall   establish a program to encourage utilities to comply with this   section by using natural gas produced in this state as the   preferential fuel. This section does not apply to generating   capacity for renewable energy technologies. ]          (b)  The commission shall establish a dispatchable   generation [ natural gas energy ] credits trading program. Any power   generation company, municipally owned utility, or electric   cooperative that does not satisfy the requirements of Subsection   (a) by directly owning or purchasing rights to dispatchable   generation capacity [ using natural gas technologies ] shall   purchase sufficient dispatchable generation [ natural gas energy ]   credits , from sources other than battery energy storage capacity,     to satisfy the requirements of this section [ by holding natural gas   energy credits in lieu of capacity from natural gas energy   technologies ].   A power generation company that exclusively   operates battery energy storage resources is not required to   purchase dispatchable generation credits under this section.          (c)   The [ Not later than January 1, 2000, the ] commission   shall adopt rules necessary to administer and enforce this section   [ and to perform any necessary studies in cooperation with the   Railroad Commission of Texas ]. At a minimum, the rules must   [ shall ]:                (1)   describe how the commission will calculate   [ establish ] the [ minimum ] annual dispatchable [ natural gas ]   generation requirement for each power generation company,   municipally owned utility, and electric cooperative operating in   the ERCOT power region [ this state ] in a manner reasonably   calculated by the commission to produce[ , on a statewide basis, ]   compliance with the requirement prescribed by Subsection (a); and                (2)  specify reasonable performance standards that all   dispatchable generation [ natural gas ] capacity additions must meet   to count against the requirement prescribed by Subsection (a) and   that:                      (A)  are designed and implemented [ operated ] so as   to maximize reliability [ the energy output from the capacity   additions in accordance with then-current industry standards and   best industry standards ]; and                      (B)  encourage the development, construction, and   operation of new natural gas energy projects at those sites in the   ERCOT power region [ this state ] that have the greatest economic   potential for capture and development of this state's   environmentally beneficial natural gas resources.          (d)   On or before January 1, 2027, the commission shall   activate the dispatchable generation credits trading program   established by this section if the commission determines that   dispatchable generation may provide less than 55 percent of all new   generating capacity installed in the ERCOT power region after   January 1, 2026. Not later than the 180th day after the date of the   program's activation, the commission by rule shall determine the   conditions for compliance and penalties for noncompliance for each   power generation company, municipally owned utility, and electric   cooperative subject to the program. A power generation company   that exclusively operates battery energy storage resources is not   subject to the program.   The commission may adopt rules providing   for alternative compliance payments [ The commission, with the   assistance of the Railroad Commission of Texas, shall adopt rules   allowing and encouraging retail electric providers and municipally   owned utilities and electric cooperatives that have adopted   customer choice to market electricity generated using natural gas   produced in this state as environmentally beneficial. The rules   shall allow a provider, municipally owned utility, or cooperative   to:                [ (1) emphasize that natural gas produced in this state   is the cleanest-burning fossil fuel; and                [ (2) label the electricity generated using natural gas   produced in this state as "green" electricity ].          (e)  In this section, "dispatchable generation" [ "natural   gas technology" ] means generating technologies other than   technologies considered non-dispatchable under Section 39.159(a)   [ any technology that exclusively relies on natural gas as a primary   fuel source ].           (f)     The independent organization certified under Section   39.151 for the ERCOT power region shall establish a tracking system   to award dispatchable generation credits to new dispatchable   generation facilities that meet eligibility requirements   established by the commission. Each megawatt of installed   dispatchable generation capacity energized after January 1, 2026,   is eligible for one dispatchable generation credit.           (g)     For the purposes of this subsection, a compliance   premium is an additional tradable instrument that is equal to one   dispatchable generation credit.   The commission shall require the   independent organization certified under Section 39.151 for the   ERCOT power region to award to a nuclear generation facility   energized after January 1, 2026, one compliance premium in addition   to each dispatchable generation credit awarded to the facility.           (h)     Not later than September 15 of each year, the   independent organization certified under Section 39.151 for the   ERCOT power region shall file with the commission a report on all   generating facilities energized in the ERCOT power region during   the prior year that includes a calculation of whether the prior   year's installed dispatchable generation capacity is in compliance   with this section.           (i)     Not later than January 15 of each year, the commission   shall notify each power generation company, municipally owned   utility, and electric cooperative of the power generation   company's, municipally owned utility's, or electric cooperative's   dispatchable generation credits requirement for the prior year, if   any.           (j)     Each power generation company, municipally owned   utility, or electric cooperative shall retire sufficient   dispatchable generation credits to meet the power generation   company's, municipally owned utility's, or electric cooperative's   dispatchable generation credits requirement not later than an   annual deadline established by the commission.          SECTION 2.  Section 40.004, Utilities Code, is amended to   read as follows:          Sec. 40.004.  JURISDICTION OF COMMISSION. Except as   specifically otherwise provided in this chapter, the commission has   jurisdiction over municipally owned utilities only for the   following purposes:                (1)  to regulate wholesale transmission rates and   service, including terms of access, to the extent provided by   Subchapter A, Chapter 35;                (2)  to regulate certification of retail service areas   to the extent provided by Chapter 37;                (3)  to regulate rates on appeal under Subchapters D   and E, Chapter 33, subject to Section 40.051(c);                (4)  to establish a code of conduct as provided by   Section 39.157(e) applicable to anticompetitive activities and to   affiliate activities limited to structurally unbundled affiliates   of municipally owned utilities, subject to Section 40.054;                (5)  to establish terms and conditions for open access   to transmission and distribution facilities for municipally owned   utilities providing customer choice, as provided by Section 39.203;                (6)  to administer the dispatchable generation   [ natural gas energy ] credits trading program under Section   39.9044(b);                (7)  to require reports of municipally owned utility   operations only to the extent necessary to:                      (A)  enable the commission to determine the   aggregate load and energy requirements of the state and the   resources available to serve that load; or                      (B)  enable the commission to determine   information relating to market power as provided by Section 39.155;   and                (8)  to evaluate and monitor the cybersecurity   preparedness of a municipally owned utility described by Section   39.1516(a)(3) or (4).          SECTION 3.  This Act takes effect September 1, 2025.