H.B. No. 3693
 
 
 
 
AN ACT
  relating to energy demand, energy load, energy efficiency
  incentives, energy programs, and energy performance measures.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subchapter Z, Chapter 44, Education Code, is
  amended by adding Section 44.902 to read as follows:
         Sec. 44.902.  GOAL TO REDUCE CONSUMPTION OF ELECTRIC ENERGY.  
  The board of trustees of a school district shall establish a goal to
  reduce the school district's annual electric consumption by five
  percent each state fiscal year for six years beginning September 1,
  2007.
         SECTION 2.  Subchapter Z, Chapter 44, Education Code, is
  amended by adding Section 44.903 to read as follows:
         Sec. 44.903.  ENERGY-EFFICIENT LIGHT BULBS IN INSTRUCTIONAL
  FACILITIES.  (a)  In this section, "instructional facility" has the
  meaning assigned by Section 46.001.
         (b)  A school district shall purchase for use in each type of
  light fixture in an instructional facility the commercially
  available model of light bulb that:
               (1)  uses the fewest watts for the necessary luminous
  flux or light output;
               (2)  is compatible with the light fixture; and
               (3)  is the most cost-effective, considering the
  factors described by Subdivisions (1) and (2).
         SECTION 3.  Subchapter Z, Chapter 51, Education Code, is
  amended by adding Section 51.9271 to read as follows:
         Sec. 51.9271.  ENERGY-EFFICIENT LIGHT BULBS IN EDUCATIONAL
  AND HOUSING FACILITIES.  (a)  In this section, "housing facility"
  has the meaning assigned by Section 53.02.
         (b)  An institution of higher education shall purchase for
  use in each type of light fixture in an educational or housing
  facility the commercially available model of light bulb that:
               (1)  is compatible with the light fixture;
               (2)  uses the fewest watts for the necessary luminous
  flux or light output; and
               (3)  is the most cost-effective, considering the
  factors described by Subdivisions (1) and (2).
         SECTION 4.  Section 2155.068(d), Government Code, is amended
  to read as follows:
         (d)  As part of the standards and specifications program, the
  commission shall:
               (1)  review contracts for opportunities to recycle
  waste produced at state buildings;
               (2)  develop and update a list of equipment and
  appliances that meet the energy efficiency standards provided by
  Section 2158.301; and
               (3)  assist state agencies in selecting products under
  Section 2158.301, as appropriate.
         SECTION 5.  Chapter 2158, Government Code, is amended by
  adding Subchapter F to read as follows:
  SUBCHAPTER F.  ENERGY AND EFFICIENCY STANDARDS FOR EQUIPMENT AND
  APPLIANCES
         Sec. 2158.301.  ENERGY CONSERVATION.  If available and
  cost-effective, a state agency shall purchase equipment and
  appliances for state use that meet or exceed:
               (1)  the federal energy conservation standards under
  Section 325, Energy Policy and Conservation Act (42 U.S.C. Section
  6295), or a federal regulation adopted under that Act; or
               (2)  the federal Energy Star standards designated by
  the United States Environmental Protection Agency and the United
  States Department of Energy.
         SECTION 6.  Subchapter A, Chapter 2165, Government Code, is
  amended by adding Section 2165.008 to read as follows:
         Sec. 2165.008.  ENERGY-EFFICIENT LIGHT BULBS IN STATE
  BUILDINGS.  A state agency or institution of higher education in
  charge and control of a state building shall purchase for use in
  each type of light fixture in the building the commercially
  available model of light bulb that:
               (1)  uses the fewest watts for the necessary luminous
  flux or light output; and
               (2)  is compatible with the light fixture.
         SECTION 7.  Subchapter B, Chapter 2165, Government Code, is
  amended by adding Section 2165.058 to read as follows:
         Sec. 2165.058.  VENDING MACHINES; ENERGY-SAVING DEVICE
  REQUIRED.  (a)  This section does not apply to a vending machine
  that contains a perishable food product, as defined by Section
  96.001, Civil Practice and Remedies Code.
         (b)  The commission shall require an entity that owns or
  operates a vending machine located in a building owned or leased by
  the state to activate and maintain any internal energy-saving or
  energy-management device or option that is already part of the
  machine or contained in the machine.
         (c)  The commission shall require the use of an external
  energy-saving or energy-management device for each vending machine
  that:
               (1)  is located in a building owned or leased by the
  state;
               (2)  operates with a compressor; and
               (3)  does not have an activated and operational
  internal energy-saving or energy-management device or option.
         (d)  An entity that owns or operates a vending machine
  subject to this section is responsible for any expenses associated
  with the acquisition, installation, or maintenance of an
  energy-saving device required by this section.
         (e)  The commission may impose an administrative fine on an
  entity that operates a vending machine subject to this section in an
  amount not to exceed $250 a year for each machine found to be in
  violation of this section or rules adopted by the commission under
  this section.
         (f)  The commission shall adopt rules relating to the
  specifications for and regulation of energy-saving devices
  required by this section.
         SECTION 8.  Subtitle F, Title 10, Government Code, is
  amended by adding Chapter 2264 to read as follows:
  CHAPTER 2264. REQUIRED PUBLICATION AND REPORTING BY GOVERNMENTAL
  ENTITIES
         Sec. 2264.001.  RECORDING AND REPORTING OF ELECTRICITY,
  WATER, AND NATURAL GAS CONSUMPTION.  (a)  In this section,
  "governmental entity" means:
               (1)  a board, commission, or department of the state or
  a political subdivision of the state, including a municipality, a
  county, or any kind of district; or
               (2)  an institution of higher education as defined by
  Section 61.003, Education Code.
         (b)  Notwithstanding any other law, a governmental entity
  responsible for payments for electric, water, or natural gas
  utility services shall record in an electronic repository the
  governmental entity's metered amount of electricity, water, or
  natural gas consumed for which it is responsible to pay and the
  aggregate costs for those utility services.  The governmental
  entity shall report the recorded information on a publicly
  accessible Internet website with an interface designed for ease of
  navigation if available, or at another publicly accessible
  location.
         SECTION 9.  Subchapter H, Chapter 2306, Government Code, is
  amended by adding Section 2306.187 to read as follows:
         Sec. 2306.187.  ENERGY EFFICIENCY STANDARDS FOR CERTAIN
  SINGLE AND MULTIFAMILY DWELLINGS.  (a)  A newly constructed single
  or multifamily dwelling that is constructed with assistance awarded
  by the department, including state or federal money, housing tax
  credits, or multifamily bond financing, must include energy
  conservation and efficiency measures specified by the department.  
  The department by rule shall establish a minimum level of energy
  efficiency measures that must be included in a newly constructed
  single or multifamily dwelling as a condition of eligibility to
  receive assistance awarded by the department for housing
  construction.  The measures adopted by the department may include:
               (1)  the installation of Energy Star-labeled ceiling
  fans in living areas and bedrooms;
               (2)  the installation of Energy Star-labeled
  appliances;
               (3)  the installation of Energy Star-labeled lighting
  in all interior units;
               (4)  the installation of Energy Star-labeled
  ventilation equipment, including power-vented fans, range hoods,
  and bathroom fans;
               (5)  the use of energy efficient alternative
  construction material, including structural insulated panel
  construction;
               (6)  the installation of central air conditioning or
  heat pump equipment with a better Seasonal Energy Efficiency Rating
  (SEER) than that required by the energy code adopted under Section
  388.003, Health and Safety Code; and
               (7)  the installation of the air ducting system inside
  the conditioned space.
         (b)  A single or multifamily dwelling must include energy
  conservation and efficiency measures specified by the department
  if:
               (1)  the dwelling is rehabilitated with assistance
  awarded by the department, including state or federal money,
  housing tax credits, or multifamily bond financing; and
               (2)  any portion of the rehabilitation includes
  alterations that will replace items that are identified as required
  efficiency measures by the department.
         (c)  The energy conservation and efficiency measures the
  department requires under Subsection (b) may not be more stringent
  than the measures the department requires under Subsection (a).
         (d)  The department shall review the measures required to
  meet the energy efficiency standards at least annually to determine
  if additional measures are desirable and to ensure that the most
  recent energy efficiency technology is considered.
         (e)  Subsections (a) and (b) do not apply to a single or
  multifamily dwelling that receives weatherization assistance money
  from the department or money provided under the first-time
  homebuyer program.
         SECTION 10.  Section 301.038, Health and Safety Code, is
  amended to read as follows:
         Sec. 301.038.  PROVISION [COST] OF SERVICES; COSTS.  (a) A
  cooperative association may provide services from a system to
  eligible institutions and may determine the amount to be charged
  for providing the services.
         (b)  Notwithstanding Sections 301.032 and 301.037, a
  cooperative association may provide from a system central heating
  and cooling services, including steam and heated and chilled water
  supply, to persons other than eligible institutions and may
  determine the amount to be charged for providing services.
         SECTION 11.  Section 388.003, Health and Safety Code, is
  amended by adding Subsections (b-1), (b-2), and (b-3) to read as
  follows:
         (b-1)  If the State Energy Conservation Office determines,
  based on written recommendations from the laboratory, that the
  energy efficiency provisions of the latest published editions of
  the International Residential Code or the International Energy
  Conservation Code for residential or commercial energy efficiency
  and air quality are equivalent to or more stringent than the
  provisions of editions adopted under Subsection (a) or (b), the
  office by rule may adopt and substitute in the energy code the
  equivalent or more stringent editions for of the initial editions
  described by Subsection (a) or (b).  If the State Energy
  Conservation Office adopts the latest published editions of the
  International Residential Code or the International Energy
  Conservation Code into the energy code, the office shall establish
  an effective date for the new editions that is not earlier than nine
  months after the date of adoption.  The laboratory shall submit
  recommendations concerning the latest published editions of the
  International Residential Code or the International Energy
  Conservation Code not later than six months after publication of
  new editions.
         (b-2)  The State Energy Conservation Office by rule shall
  establish a procedure for allowing an opportunity for persons who
  have an interest in the adoption of energy efficiency codes under
  Subsection (b-1) to comment on a code considered for adoption,
  including:
               (1)  commercial and residential builders;
               (2)  architects;
               (3)  engineers;
               (4)  county and other local government authorities; and
               (5)  environmental groups.
         (b-3)  In developing written recommendations under
  Subsection (b-1), the laboratory shall consider the comments
  submitted under Subsection (b-2).
         SECTION 12.  Section 388.005, Health and Safety Code, is
  amended to read as follows:
         Sec. 388.005.  ENERGY EFFICIENCY PROGRAMS IN CERTAIN
  GOVERNMENTAL ENTITIES [POLITICAL SUBDIVISIONS].  (a)  In this
  section:
               (1)  "Institution of higher education" includes an
  institution of higher education as defined by Section 61.003,
  Education Code, and a private institution of higher education that
  receives funding from the state.
               (2)  "Political[, "political] subdivision" means:
                     (A) [(1)]  an affected county; or
                     (B) [(2)]  any political subdivision in a
  nonattainment area or in an affected county other than:
                           (i) [(A)]  a school district; or
                           (ii) [(B)]  a district as defined by Section
  36.001 or 49.001, Water Code, that had a total annual electricity
  expense of less than $200,000 in the previous fiscal year of the
  district.
               (3)  "State agency" means a department, commission,
  board, office, council, or other agency in the executive branch of
  state government that is created by the constitution or a statute of
  this state and has authority not limited to a geographical portion
  of the state.
         (b)  Each political subdivision, institution of higher
  education, or state agency shall implement all energy efficiency
  measures that meet the standards established for a contract for
  energy conservation measures under Section 302.004(b), Local
  Government Code, in order to reduce electricity consumption by the
  existing facilities of the entity [the political subdivision].
         (c)  Each political subdivision, institution of higher
  education, or state agency shall establish a goal to reduce the
  electric consumption by the entity [political subdivision] by five
  percent each state fiscal year for six [five] years, beginning
  September 1, 2007 [January 1, 2002].
         (d)  A political subdivision, institution of higher
  education, or state agency that does not attain the goals under
  Subsection (c) must include in the report required by Subsection
  (e) justification that the entity [political subdivision] has
  already implemented all available measures.
         (e)  A political subdivision, institution of higher
  education, or state agency annually shall report to the State
  Energy Conservation Office, on forms provided by that office,
  regarding the entity's [political subdivision's] efforts and
  progress under this section.  The State Energy Conservation Office
  shall provide assistance and information to the entity [political
  subdivisions] to help the entity [the political subdivisions] meet
  the goals set under this section.
         (f)  This section does not apply to a state agency or an
  institution of higher education that the State Energy Conservation
  Office determines that, before September 1, 2007, adopted a plan
  for conserving energy under which the agency or institution
  established a percentage goal for reducing the consumption of
  electricity.  The exemption provided by this section applies only
  while the agency or institution has an energy conservation plan in
  effect and only if the agency or institution submits reports on the
  conservation plan each calendar quarter to the governor, the
  Legislative Budget Board, and the State Energy Conservation Office.
         SECTION 13.  Section 388.008, Health and Safety Code, is
  amended by amending Subsections (a) and (c) and adding Subsection
  (d) to read as follows:
         (a)  The laboratory shall develop a standardized report
  format to be used by providers of home energy ratings.  The
  laboratory may develop different report formats for rating newly
  constructed residences from those for existing residences.  The
  form must be designed to give potential buyers information on a
  structure's energy performance, including:
               (1)  insulation;
               (2)  types of windows;
               (3)  heating and cooling equipment;
               (4)  water heating equipment;
               (5)  additional energy conserving features, if any;
               (6)  results of performance measurements of building
  tightness and forced air distribution; and
               (7)  an overall rating of probable energy efficiency
  relative to the minimum requirements of the International Energy
  Conservation Code or the energy efficiency chapter of the
  International Residential Code, as appropriate.
         (c)  The laboratory may cooperate with an industry
  organization or trade association to:
               (1)  develop guidelines for home energy ratings;
               (2)  provide training for individuals performing home
  energy ratings and providers of home energy ratings; and
               (3)  provide a registry of completed ratings for newly
  constructed residences and residential improvement projects for
  the purpose of computing the energy savings and emissions
  reductions benefits of the [The] home energy ratings program [shall
  be implemented by September 1, 2002].
         (d)  The laboratory shall include information on the
  benefits attained from this program in an annual report to the
  commission.
         SECTION 14.  The heading to Section 74.3013, Property Code,
  is amended to read as follows:
         Sec. 74.3013.  DELIVERY OF MONEY FOR RURAL SCHOLARSHIP,
  [AND] ECONOMIC DEVELOPMENT, AND ENERGY EFFICIENCY ASSISTANCE.
         SECTION 15.  Sections 74.3013(a), (b), (e), (f), and (g),
  Property Code, are amended to read as follows:
         (a)  Notwithstanding and in addition to any other provision
  of this chapter or other law, a nonprofit cooperative corporation
  may deliver reported money to a scholarship fund for rural
  students, [or] to stimulate rural economic development, or to
  provide energy efficiency assistance to members of electric
  cooperatives, instead of delivering the money to the comptroller as
  prescribed in Section 74.301.
         (b)  A nonprofit cooperative corporation may deliver the
  money under this section only:
               (1)  to a scholarship fund established by one or more
  nonprofit cooperative corporations in this state to enable students
  from rural areas to attend college, technical school, or other
  postsecondary educational institution; [and]
               (2)  to an economic development fund for the
  stimulation and improvement of business and commercial activity for
  economic development in rural communities; and
               (3)  to an energy efficiency assistance fund to assist
  members of an electric cooperative in reducing their energy
  consumption and electricity bills.
         (e)  The comptroller shall prescribe forms and procedures
  governing this section, including forms and procedures relating to:
               (1)  notice of presumed abandoned property;
               (2)  delivery of reported money to a scholarship, [or]
  economic development fund, or energy efficiency assistance fund;
               (3)  filing of a claim; and
               (4)  procedures to allow equitable opportunity for
  participation by each nonprofit cooperative corporation in the
  state.
         (f)  During a state fiscal year the total amount of money
  that may be transferred by all nonprofit cooperative corporations
  under this section may not exceed $2 [$1] million.  No more than 20
  percent of each nonprofit cooperative's funds eligible for delivery
  under this section shall be used for economic development.  The
  comptroller shall adopt procedures to record the total amount of
  money transferred annually [to allow equitable opportunity for
  participation with preference given to corporations already
  providing similar scholarship opportunities in other states].
         (g)  Nonprofit cooperative corporations may combine
  [economic development] funds from other sources with any [economic
  development] funds delivered under this section.  In addition, such
  cooperatives may engage in other business and commercial
  activities, in their own behalf or through such subsidiaries and
  affiliates as deemed necessary, in order to provide and promote
  educational opportunities and to stimulate rural economic
  development.
         SECTION 16.  Subchapter H, Chapter 151, Tax Code, is amended
  by adding Section 151.333 to read as follows:
         Sec. 151.333.  ENERGY-EFFICIENT PRODUCTS.  (a)  In this
  section, "energy-efficient product" means a product that has been
  designated as an Energy Star qualified product under the Energy
  Star program jointly operated by the United States Environmental
  Protection Agency and the United States Department of Energy.
         (b)  This section applies only to the following
  energy-efficient products:
               (1)  an air conditioner the sales price of which does
  not exceed $6,000;
               (2)  a clothes washer;
               (3)  a ceiling fan;
               (4)  a dehumidifier;
               (5)  a dishwasher;
               (6)  an incandescent or fluorescent lightbulb;
               (7)  a programmable thermostat; and
               (8)  a refrigerator the sales price of which does not
  exceed $2,000.
         (c)  The sale of an energy-efficient product to which this
  section applies is exempted from the taxes imposed by this chapter
  if the sale takes place during a period beginning at 12:01 a.m. on
  the Saturday preceding the last Monday in May (Memorial Day) and
  ending at 11:59 p.m. on the last Monday in May.
         SECTION 17.  Subchapter A, Chapter 313, Tax Code, is amended
  by adding Section 313.008 to read as follows:
         Sec. 313.008.  REPORT ON COMPLIANCE WITH ENERGY-RELATED
  AGREEMENTS.  (a)  Before the beginning of each regular session of
  the legislature, the comptroller shall submit to the lieutenant
  governor, the speaker of the house of representatives, and each
  member of the legislature a report assessing the progress of each
  agreement entered into under this chapter utilizing data certified
  by agreement recipients, on each agreement entered into under this
  chapter involving energy-related projects, including wind
  generation, ethanol production, liquefied natural gas terminals,
  low sulfur diesel production, refinery cogeneration, and nuclear
  energy production.  The report must state for each agreement:
               (1)  the number of qualifying jobs each recipient of a
  limitation on appraised value committed to create;
               (2)  the number of qualifying jobs each recipient
  created;
               (3)  the median wage of the new jobs each recipient
  created;
               (4)  the amount of the qualified investment each
  recipient committed to expend or allocate per project;
               (5)  the amount of the qualified investment each
  recipient expended or allocated per project;
               (6)  the market value of the qualified property of each
  recipient as established by the local appraiser;
               (7)  the limitation on appraised value for the
  qualified property of each recipient;
               (8)  the dollar amount of the ad valorem taxes that
  would have been imposed on the market value of the qualified
  property;
               (9)  the dollar amount of the ad valorem taxes imposed
  on the qualified property;
               (10)  the number of new jobs created by each recipient
  in each sector of the North American Industry Classification System
  (NAICS); and
               (11)  of the number of new jobs each recipient created,
  the number of positions created that provide health benefits for
  employees.
         (b)  The report may not include information that is made
  confidential by law.
         (c)  The comptroller may require a recipient to submit, on a
  form provided by the comptroller, information required to complete
  the report.
         SECTION 18.  Section 31.004, Utilities Code, is amended by
  adding Subsection (c) to read as follows:
         (c)  The commission shall provide information to school
  districts regarding how a school district may finance the
  installation of solar electric generation panels for school
  district buildings.
         SECTION 19.  Section 39.002, Utilities Code, is amended to
  read as follows:
         Sec. 39.002.  APPLICABILITY.  This chapter, other than
  Sections 39.155, 39.157(e), 39.203, 39.903, [and] 39.904, 39.9051,
  39.9052, and 39.914(e), does not apply to a municipally owned
  utility or an electric cooperative. Sections 39.157(e), 39.203, and
  39.904, however, apply only to a municipally owned utility or an
  electric cooperative that is offering customer choice. If there is
  a conflict between the specific provisions of this chapter and any
  other provisions of this title, except for Chapters 40 and 41, the
  provisions of this chapter control.
         SECTION 20.  Section 39.107, Utilities Code, is amended by
  adding Subsection (i) to read as follows:
         (i)  Subject to the restrictions in Subsection (h), it is the
  intent of the legislature that net metering and advanced meter
  information networks be deployed as rapidly as possible to allow
  customers to better manage energy use and control costs, and to
  facilitate demand response initiatives.
         SECTION 21.  Subchapter Z, Chapter 39, Utilities Code, is
  amended by adding Section 39.9025 to read as follows:
         Sec. 39.9025.  HOME ELECTRIC ENERGY REPORTS.  The commission
  may encourage retail electric providers to deliver individualized
  home electric energy reports to educate consumers about electric
  energy use and energy efficiency to assist consumers to use energy
  more efficiently.
         SECTION 22.  Section 39.905, Utilities Code, is amended by
  amending Subsections (a), (b), (d), (e), and (f) and adding
  Subsections (b-1), (b-2), (b-3), (b-4), and (g) to read as follows:
         (a)  It is the goal of the legislature that:
               (1)  electric utilities will administer energy
  efficiency [savings] incentive programs in a market-neutral,
  nondiscriminatory manner but will not offer underlying competitive
  services;
               (2)  all customers, in all customer classes, will have
  a choice of and access to energy efficiency alternatives and other
  choices from the market that allow each customer to reduce energy
  consumption, peak demand, or energy costs; [and]
               (3)  each electric utility will provide, through
  market-based standard offer programs or limited, targeted,
  market-transformation programs, incentives sufficient for retail
  electric providers and competitive energy service providers to
  acquire additional cost-effective energy efficiency for
  residential and commercial customers equivalent to at least:
                     (A)  10 percent of the electric utility's annual
  growth in demand of residential and commercial customers by
  December 31, 2007;
                     (B)  15 percent of the electric utility's annual
  growth in demand of residential and commercial customers by
  December 31, 2008, provided that the electric utility's program
  expenditures for 2008 funding may not be greater than 75 percent
  above the utility's program budget for 2007 for residential and
  commercial customers, as included in the April 1, 2006, filing; and
                     (C)  20 percent of the electric utility's annual
  growth in demand of residential and commercial customers by
  December 31, 2009, provided that the electric utility's program
  expenditures for 2009 funding may not be greater than 150 percent
  above the utility's program budget for 2007 for residential and
  commercial customers, as included in the April 1, 2006, filing;
               (4)  each electric utility in the ERCOT region shall
  use its best efforts to encourage and facilitate the involvement of
  the region's retail electric providers in the delivery of
  efficiency programs and demand response programs under this
  section;
               (5)  retail electric providers in the ERCOT region, and
  electric utilities outside of the ERCOT region, shall provide
  customers with energy efficiency educational materials; and
               (6)  notwithstanding Subsection (a)(3), electric
  utilities shall continue to make available, at 2007 funding and
  participation levels, any load management standard offer programs
  developed for industrial customers and implemented prior to May 1,
  2007.
         (b)  The commission shall provide oversight and adopt rules
  and procedures[, as necessary,] to ensure that the utilities can
  achieve the goal of this section, including:
               (1)  establishing an energy efficiency cost recovery
  factor for ensuring timely and reasonable cost recovery for utility
  expenditures made to satisfy the goal of this section;
               (2)  establishing an incentive under Section 36.204 to
  reward utilities administering programs under this section that
  exceed the minimum goals established by this section;
               (3)  providing a utility that is unable to establish an
  energy efficiency cost recovery factor in a timely manner due to a
  rate freeze with a mechanism to enable the utility to:
                     (A)  defer the costs of complying with this
  section; and
                     (B)  recover the deferred costs through an energy
  efficiency cost recovery factor on the expiration of the rate
  freeze period;
               (4)  ensuring that the costs associated with programs
  provided under this section are borne by the customer classes that
  receive the services under the programs; and
               (5)  ensuring the program rules encourage the value of
  the incentives to be passed on to the end-use customer.
         (b-1)  The energy efficiency cost recovery factor under
  Subsection (b)(1) may not result in an over-recovery of costs but
  may be adjusted each year to change rates to enable utilities to
  match revenues against energy efficiency costs and any incentives
  to which they are granted. The factor shall be adjusted to reflect
  any over-collection or under-collection of energy efficiency cost
  recovery revenues in previous years.
         (b-2)  The commission shall conduct a study, to be funded by
  electric utilities, regarding cost-effective energy efficiency in
  this state. Not later than January 15, 2009, the commission shall
  submit to the legislature a report regarding the commission's
  findings that:
               (1)  considers the technical, economic, and achievable
  potential, and natural occurrence of energy efficiency in this
  state in terms of kilowatts and kilowatt hours for each element;
               (2)  determines the amount of savings that is
  achievable through utility programs in compliance with commission
  rules;
               (3)  recommends whether:
                     (A)  utility funding of energy efficiency in areas
  of the state with competitive retail electric service should
  continue;
                     (B)  energy efficiency in areas with competitive
  retail electric service is best provided by the competitive market;
  and
                     (C)  utilities should fund education programs to
  be conducted by the commission regarding the provision of energy
  efficiency service from the competitive market;
               (4)  provides estimates of achievable savings specific
  to each utility service area and each customer class;
               (5)  quantifies the costs and rate impacts associated
  with meeting energy efficiency goals;
               (6)  determines whether an increase in the goal to 30
  percent of the growth in demand for each utility is achievable by
  December 31, 2010, and whether an increase in the goal to 50 percent
  of the growth in demand for electricity is achievable by December
  31, 2015, by each utility in the service area served through the
  energy efficiency programs described by this section;
               (7)  recommends policies designed to promote energy
  efficiency in the areas of the state that are not served by the
  utilities which administer programs under this section; and
               (8)  identifies potential barriers to the increased
  participation by retail electric providers in the delivery of
  energy efficiency services to ERCOT customers, and to the increased
  potential for energy efficiency in ERCOT or in this state
  generally, including any recommended regulatory or statutory
  changes to eliminate such barriers or facilitate greater
  efficiency.
         (b-3)  Beginning not later than January 1, 2008, the
  commission, in consultation with the State Energy Conservation
  Office, annually for a period of five years shall compute and report
  to ERCOT the projected energy savings and demand impacts for each
  entity in the ERCOT region that administers standard offer
  programs, market transformation programs, combined heating and
  power technology, demand response programs, solar incentive
  programs, appliance efficiency standards, energy efficiency
  programs in public buildings, and any other relevant programs that
  are reasonably anticipated to reduce electricity energy or peak
  demand or that serve as substitutes for electric supply.
         (b-4)  The commission and ERCOT shall develop a method to
  account for the projected efficiency impacts under Subsection (b-3)
  in ERCOT's annual forecasts of future capacity, demand, and
  reserves.
         (d)  The commission shall establish a procedure for
  reviewing and evaluating market-transformation program options
  described by this subsection and other options. In evaluating
  program options, the commission may consider the ability of a
  program option to reduce costs to customers through reduced demand,
  energy savings, and relief of congestion.  Utilities [adopt the
  following market-transformation program options that the
  utilities] may choose to implement any program option approved by
  the commission after its evaluation in order to satisfy the goal in
  Subsection (a), including [(a)(3)]:
               (1)  energy-smart schools;
               (2)  appliance retirement and recycling;
               (3)  air conditioning system tune-ups; [and]
               (4)  the use of trees or other landscaping for energy
  efficiency;
               (5)  customer energy management and demand response
  programs;
               (6)  high performance residential and commercial
  buildings that will achieve the levels of energy efficiency
  sufficient to qualify those buildings for federal tax incentives;
               (7)  programs for customers who rent or lease their
  residence or commercial space;
               (8)  programs providing energy monitoring equipment to
  customers that enable a customer to better understand the amount,
  price, and time of the customer's energy use;
               (9)  energy audit programs for owners and other
  residents of single-family or multifamily residences and for small
  commercial customers;
               (10)  net-zero energy new home programs;
               (11)  solar thermal or solar electric programs; and
               (12)  programs for using windows and other glazing
  systems, glass doors, and skylights in residential and commercial
  buildings that reduce solar gain by at least 30 percent from the
  level established for the federal Energy Star windows program.
         (e)  An electric utility may use money approved by the
  commission for energy efficiency programs to perform necessary
  energy efficiency research and development to foster continuous
  improvement and innovation in the application of energy efficiency
  technology and energy efficiency program design and
  implementation.  Money the utility uses under this subsection may
  not exceed 10 percent of the greater of:
               (1)  the amount the commission approved for energy
  efficiency programs in the utility's most recent full rate
  proceeding; or
               (2)  the commission-approved expenditures by the
  utility for energy efficiency in the previous year.
         (f)  Unless funding is provided under Section 39.903,
  [beginning January 1, 2006,] each unbundled transmission and
  distribution utility shall include in its energy efficiency plan a
  targeted low-income energy efficiency program as described by
  Section 39.903(f)(2), and the savings achieved by the program shall
  count toward the transmission and distribution utility's energy
  efficiency goal.  The commission shall determine the appropriate
  level of funding to be allocated to both targeted and standard offer
  low-income energy efficiency programs in each unbundled
  transmission and distribution utility service area.  The total
  expenditures for both targeted and standard offer low-income energy
  efficiency programs will be based on the amount spent by the
  transmission and distribution utility on the commission's
  hard-to-reach program in calendar year 2003.  This level of funding
  for low-income energy efficiency programs shall be provided from
  money approved by the commission for the transmission and
  distribution utility's energy efficiency programs.  The state
  agency that administers the federal weatherization assistance
  program shall provide reports as required by the commission to
  provide the most current information available on energy and peak
  demand savings achieved in each transmission and distribution
  utility service area.
         (g)  The commission may provide for a good cause exemption to
  a utility's liability for an administrative penalty or other
  sanction if the utility fails to meet a goal for energy efficiency
  under this section and the utility's failure to meet the goal is
  caused by one or more factors outside of the utility's control,
  including:
               (1)  insufficient demand by retail electric providers
  and competitive energy service providers for program incentive
  funds made available by the utility through its programs;
               (2)  changes in building energy codes; and
               (3)  changes in government-imposed appliance or
  equipment efficiency standards.
         SECTION 23.  Subchapter Z, Chapter 39, Utilities Code, is
  amended by adding Sections 39.9051, 39.9052, 39.911, 39.912, and
  39.913 to read as follows:
         Sec. 39.9051.  ENERGY EFFICIENCY FOR MUNICIPALLY OWNED
  UTILITIES.  (a)  In this section, "municipally owned utility" has
  the meaning assigned by Section 11.003.
         (b)  This section applies only to a municipally owned utility
  that had retail sales of more than 500,000 megawatt hours in 2005.
         (c)  It is the goal of the legislature that:
               (1)  municipally owned utilities will administer
  energy savings incentive programs;
               (2)  customers of a municipally owned utility will have
  a choice of and access to energy efficiency alternatives that allow
  customers to reduce energy consumption, peak demand, or energy
  costs; and
               (3)  each municipally owned utility will provide
  incentives sufficient for municipally owned utilities to acquire
  additional cost-effective energy efficiency.
         (d)  The governing body of a municipally owned utility shall
  provide oversight and adopt rules and procedures, as necessary, to
  ensure that the utility can achieve the goal of this section.
         (e)  If a municipally owned utility adopts customer choice by
  decision of the governing body under Chapter 40, the commission
  shall provide oversight and adopt rules and procedures, as
  necessary, to ensure that the municipally owned utility can achieve
  the goal in this section in a market-neutral, nondiscriminatory
  manner.  The commission shall, to the extent possible, include
  existing energy efficiency programs already adopted by the
  municipally owned utility.
         (f)  Not later than September 1, 2009, a municipally owned
  utility must report to the State Energy Conservation Office, in a
  form and manner determined by the utility in consultation with the
  office, information regarding the combined effects of the energy
  efficiency activities of the utility.
         Sec. 39.9052.  ENERGY EFFICIENCY FOR ELECTRIC COOPERATIVES.  
  (a)  An electric cooperative shall consider adopting and
  implementing energy efficiency programs that reduce the
  cooperative's annual growth in demand in a manner consistent with
  standards established in the state for other utilities.
         (b)  Not later than September 1, 2009, an electric
  cooperative that had retail sales of more than 500,000 megawatt
  hours in 2005 must report to the State Energy Conservation Office,
  in a form and manner determined by the electric cooperative in
  consultation with the office, information regarding the combined
  effects of the energy efficiency activities of the electric
  cooperative.
         Sec. 39.911.  ALTERNATIVE FUNDING FOR ENERGY EFFICIENCY AND
  RENEWABLE ENERGY SYSTEMS.  The State Energy Conservation Office, in
  coordination with the governor, the Department of Agriculture, the
  Texas Commission on Environmental Quality, the Texas Education
  Agency, the commission, and other appropriate state agencies, shall
  solicit gifts, grants, and other financial resources available to
  fund energy efficiency improvements and renewable energy systems
  for public and private facilities in this state.
         Sec. 39.912.  REPORT ON COMBINED HEATING AND POWER
  TECHNOLOGY.  The commission shall study the installation and use of
  combined heating and power technology in this state, and shall
  submit a report regarding the commission's findings to the 81st
  Legislature.  The report shall include:
               (1)  an explanation describing combined heating and
  power technology and its use; and
               (2)  an explanation of how combined heating and power
  technology can be implemented in this state to meet energy
  efficiency goals.
         Sec. 39.913.  COMBINING CERTAIN REPORTS.  The commission may
  combine the reports required under Sections 39.905(b-2) and 39.912.
         SECTION 24.  Subchapter Z, Chapter 39, Utilities Code, is
  amended by adding Section 39.914 to read as follows:
         Sec. 39.914.  CREDIT FOR SURPLUS SOLAR GENERATION BY PUBLIC
  SCHOOLS.  (a)  An electric utility or retail electric provider shall
  provide for net metering and contract with an independent school
  district so that:
               (1)  surplus electricity produced by a school
  building's solar electric generation panels is made available for
  sale to the electric transmission grid and distribution system; and
               (2)  the net value of that surplus electricity is
  credited to the district.
         (b)  For areas of this state in which customer choice has not
  been introduced, the commission by rule shall require that credits
  for electricity produced by a school building's solar electric
  generation panels reflect the value of the electricity that is made
  available for sale to the electric utility in accordance with
  federal regulations.
         (c)  For independent school districts in areas in which
  customer choice has been introduced, the district must sell the
  school buildings' surplus electricity produced to the retail
  electric provider that serves the school district's load at a value
  agreed to between the district and the provider that serves the
  district's load.  The agreed value may be based on the clearing
  price of energy at the time of day that the electricity is made
  available to the grid.  The independent organization identified in
  Section 39.151 shall develop procedures so that the amount of
  electricity purchased from a district under this section is
  accounted for in settling the total load served by the provider that
  serves the district's load.  A district requesting net metering
  services for purposes of this section must have metering devices
  capable of providing measurements consistent with the independent
  organization's settlement requirements.
         (d)  A transmission and distribution utility shall make
  available to an independent school district for purposes of this
  section metering required for services provided under this section,
  including separate meters that measure the load and generator
  output or a single meter capable of measuring separately in-flow
  and out-flow at the point of common coupling meter point.  The
  district must pay the differential cost of the metering unless the
  meters are provided at no additional cost.  Except as provided by
  this section, Section 39.107 applies to metering under this
  section.
         (e)  A municipally owned utility or electric cooperative
  shall consider and complete the determinations regarding net
  metering service as provided by the federal Public Utility
  Regulatory Policies Act of 1978 (16 U.S.C. Section 2601 et seq., as
  amended by the federal Energy Policy Act of 2005 (Pub. L. No.
  109-58)) after proceedings conducted in accordance with that law.  
  A municipally owned utility or electric cooperative shall report
  the determinations made under this subsection to the State Energy
  Conservation Office and include in that report information
  regarding metering electricity generated by solar panels on public
  school building rooftops.
         SECTION 25.  Subchapter Z, Chapter 39, Utilities Code, is
  amended by adding Section 39.915 to read as follows:
         Sec. 39.915.  CONSIDERATION AND APPROVAL OF CERTAIN
  TRANSACTIONS.  (a)  To protect retail customers in this state, and
  to ensure the continuation of cost-effective energy efficiency
  measures and delivery systems, notwithstanding any other provision
  of this title, an electric utility or transmission and distribution
  utility must report to and obtain approval of the commission before
  closing any transaction in which:
               (1)  the electric utility or transmission and
  distribution utility will be merged or consolidated with another
  electric utility or transmission and distribution utility;
               (2)  at least 50 percent of the stock of the electric
  utility or transmission and distribution utility will be
  transferred or sold; or
               (3)  a controlling interest or operational control of
  the electric utility or transmission and distribution utility will
  be transferred.
         (b)  The commission shall approve a transaction under
  Subsection (a) if the commission finds that the transaction is in
  the public interest.  In making its determination, the commission
  shall consider whether the transaction will adversely affect the
  reliability of service, availability of service, or cost of service
  of the electric utility or transmission and distribution utility.  
  The commission shall make the determination concerning a
  transaction under this subsection not later than the 180th day
  after the date the commission receives the relevant report.  If the
  commission has not made a determination before the 181st day after
  that date, the transaction is considered approved.
         (c)  Subsections (a) and (b) do not apply to a transaction
  described by Subsection (a) for which a definitive agreement was
  executed before April 1, 2007, if an electric utility or
  transmission and distribution utility or a person seeking to
  acquire or merge with an electric utility or transmission and
  distribution utility made a filing for review of the transaction
  under Section 14.101 before May 1, 2007, and the resulting
  proceeding was not withdrawn.
         (d)  If an electric utility or transmission and distribution
  utility or a person seeking to acquire or merge with an electric
  utility or transmission and distribution utility files with the
  commission a stipulation, representation, or commitment in advance
  of or as part of a filing under this section or under Section
  14.101, the commission may enforce the stipulation,
  representation, or commitment to the extent that the stipulation,
  representation, or commitment is consistent with the standards
  provided by this section and Section 14.101.  The commission may
  reasonably interpret and enforce conditions adopted under this
  section.
         SECTION 26.  Subchapter Z, Chapter 39, Utilities Code, is
  amended by adding Section 39.916 to read as follows:
         Sec. 39.916.  INTERCONNECTION OF DISTRIBUTED RENEWABLE
  GENERATION.  (a)  In this section:
               (1)  "Distributed renewable generation" means electric
  generation with a capacity of not more than 2,000 kilowatts
  provided by a renewable energy technology, as defined by Section
  39.904, that is installed on a retail electric customer's side of
  the meter.
               (2)  "Distributed renewable generation owner" means
  the owner of distributed renewable generation.
               (3)  "Interconnection" means the right of a distributed
  renewable generation owner to physically connect distributed
  renewable generation to an electricity distribution system, and the
  technical requirements, rules, or processes for the connection.
         (b)  A transmission and distribution utility or electric
  utility shall allow interconnection if:
               (1)  the distributed renewable generation to be
  interconnected has a five-year warranty against breakdown or undue
  degradation; and
               (2)  the rated capacity of the distributed renewable
  generation does not exceed the transmission and distribution
  utility or electric utility service capacity.
         (c)  A customer may request interconnection by filing an
  application for interconnection with the transmission and
  distribution utility or electric utility.  Procedures of a
  transmission and distribution utility or electric utility for the
  submission and processing of a customer's application for
  interconnection shall be consistent with rules adopted by the
  commission regarding interconnection.
         (d)  The commission by rule shall establish safety,
  technical, and performance standards for distributed renewable
  generation that may be interconnected.  In adopting the rules, the
  commission shall consider standards published by the Underwriters
  Laboratories, the National Electric Code, the National Electric
  Safety Code, and the Institute of Electrical and Electronics
  Engineers.
         (e)  A transmission and distribution utility, electric
  utility, or retail electric provider may not require a distributed
  renewable generation owner whose distributed renewable generation
  meets the standards established by rule under Subsection (d) to
  purchase an amount, type, or classification of liability insurance
  the distributed renewable generation owner would not have in the
  absence of the distributed renewable generation.
         (f)  A transmission and distribution utility or electric
  utility shall make available to a distributed renewable generation
  owner for purposes of this section metering required for services
  provided under this section, including separate meters that measure
  the load and generator output or a single meter capable of measuring
  in-flow and out-flow at the point of common coupling meter point.
  The distributed renewable generation owner must pay the
  differential cost of the metering unless the meters are provided at
  no additional cost.  Except as provided by this section, Section
  39.107 applies to metering under this section.
         (g)  A renewable energy credit that is earned by a
  distributed renewable generation owner through the interconnection
  of a renewable electric system is the sole property of the
  distributed renewable generation owner unless the distributed
  renewable generation owner engages in a transaction to sell or
  trade the credit under Section 39.904.  For electric utilities, the
  commission shall address the ownership of renewable energy credits
  associated with power sold to the utility.
         (h)  An electric utility or retail electric provider may
  contract with a distributed renewable generation owner so that:
               (1)  surplus electricity produced by distributed
  renewable generation is made available for sale to the transmission
  grid and distribution system; and
               (2)  the net value of that surplus electricity is
  credited to the distributed renewable generation owner.
         [(i) reserved]
         (j)  For distributed renewable generation owners in areas in
  which customer choice has been introduced, the distributed
  renewable generation owner must sell the owner's surplus
  electricity produced to the retail electric provider that serves
  the distributed renewable generation owner's load at a value agreed
  to between the distributed renewable generation owner and the
  provider that serves the owner's load which may include, but is not
  limited to, an agreed value based on the clearing price of energy at
  the time of day that the electricity is made available to the grid
  or it may be a credit applied to an account during a billing period
  that may be carried over to subsequent billing periods until the
  credit has been redeemed. The independent organization identified
  in Section 39.151 shall develop procedures so that the amount of
  electricity purchased from a distributed renewable generation
  owner under this section is accounted for in settling the total load
  served by the provider that serves that owner's load by January 1,
  2009.  A distributed renewable generation owner requesting net
  metering services for purposes of this section must have metering
  devices capable of providing measurements consistent with the
  independent organization's settlement requirements.
         SECTION 27.  Section 40.055(a), Utilities Code, is amended
  to read as follows:
         (a)  The municipal governing body or a body vested with the
  power to manage and operate a municipally owned utility has
  exclusive jurisdiction to:
               (1)  set all terms of access, conditions, and rates
  applicable to services provided by the municipally owned utility,
  subject to Sections 40.054 and 40.056, including nondiscriminatory
  and comparable rates for distribution but excluding wholesale
  transmission rates, terms of access, and conditions for wholesale
  transmission service set by the commission under this subtitle,
  provided that the rates for distribution access established by the
  municipal governing body shall be comparable to the distribution
  access rates that apply to the municipally owned utility and the
  municipally owned utility's affiliates;
               (2)  determine whether to unbundle any energy-related
  activities and, if the municipally owned utility chooses to
  unbundle, whether to do so structurally or functionally;
               (3)  reasonably determine the amount of the municipally
  owned utility's stranded investment;
               (4)  establish nondiscriminatory transition charges
  reasonably designed to recover the stranded investment over an
  appropriate period of time, provided that recovery of retail
  stranded costs shall be from all existing or future retail
  customers, including the facilities, premises, and loads of those
  retail customers, within the utility's geographical certificated
  service area as it existed on May 1, 1999;
               (5)  determine the extent to which the municipally
  owned utility will provide various customer services at the
  distribution level, including other services that the municipally
  owned utility is legally authorized to provide, or will accept the
  services from other providers;
               (6)  manage and operate the municipality's electric
  utility systems, including exercise of control over resource
  acquisition and any related expansion programs;
               (7)  establish and enforce service quality and
  reliability standards and consumer safeguards designed to protect
  retail electric customers, including safeguards that will
  accomplish the objectives of Sections 39.101(a) and (b), consistent
  with this chapter;
               (8)  determine whether a base rate reduction is
  appropriate for the municipally owned utility;
               (9)  determine any other utility matters that the
  municipal governing body or body vested with power to manage and
  operate the municipally owned utility believes should be included;
  [and]
               (10)  make any other decisions affecting the
  municipally owned utility's participation in customer choice that
  are not inconsistent with this chapter; and
               (11)  determine the extent to which the municipally
  owned utility offers energy efficiency programs and how the
  programs are administered by the utility, except as provided by
  Section 39.9051(e).
         SECTION 28.  Section 41.055, Utilities Code, is amended to
  read as follows:
         Sec. 41.055.  JURISDICTION OF BOARD OF DIRECTORS.  A board of
  directors has exclusive jurisdiction to:
               (1)  set all terms of access, conditions, and rates
  applicable to services provided by the electric cooperative, except
  as provided by Sections 41.054 and 41.056, including
  nondiscriminatory and comparable rates for distribution but
  excluding wholesale transmission rates, terms of access, and
  conditions for wholesale transmission service set by the commission
  under Subchapter A, Chapter 35, provided that the rates for
  distribution established by the electric cooperative shall be
  comparable to the distribution rates that apply to the electric
  cooperative and its subsidiaries;
               (2)  determine whether to unbundle any energy-related
  activities and, if the board of directors chooses to unbundle,
  whether to do so structurally or functionally;
               (3)  reasonably determine the amount of the electric
  cooperative's stranded investment;
               (4)  establish nondiscriminatory transition charges
  reasonably designed to recover the stranded investment over an
  appropriate period of time;
               (5)  determine the extent to which the electric
  cooperative will provide various customer services, including
  nonelectric services, or accept the services from other providers;
               (6)  manage and operate the electric cooperative's
  utility systems, including exercise of control over resource
  acquisition and any related expansion programs;
               (7)  establish and enforce service quality standards,
  reliability standards, and consumer safeguards designed to protect
  retail electric customers;
               (8)  determine whether a base rate reduction is
  appropriate for the electric cooperative;
               (9)  determine any other utility matters that the board
  of directors believes should be included;
               (10)  sell electric energy and capacity at wholesale,
  regardless of whether the electric cooperative participates in
  customer choice;
               (11)  determine the extent to which the electric
  cooperative offers energy efficiency programs and how the programs
  are administered by the electric cooperative; and
               (12) [(11)]  make any other decisions affecting the
  electric cooperative's method of conducting business that are not
  inconsistent with the provisions of this chapter.
         SECTION 29.  The State Energy Conservation Office shall
  adopt rules implementing a procedure for stakeholder participation
  as required under Section 388.003(b-2), Health and Safety Code, as
  added by this Act, as soon as practicable after the effective date
  of this Act.
         SECTION 30.  (a)  The energy conservation standards for
  equipment and appliances under Section 2158.301, Government Code,
  as added by this Act, apply to a purchase by a state agency on or
  after the effective date of this Act.
         (b)  The Texas Building and Procurement Commission shall
  develop a list of equipment and appliances under Section 2155.068,
  Government Code, as amended by this Act, as soon as practicable
  after the effective date of this Act.
         SECTION 31.  Section 2165.058(c), Government Code, as added
  by this Act, applies only to an entity that contracts with the Texas
  Building and Procurement Commission or another state agency to
  install or operate a vending machine on or after the effective date
  of this Act.
         SECTION 32.  The change in law made by this Act does not
  affect taxes imposed before the effective date of this Act, and the
  law in effect before the effective date of this Act is continued in
  effect for purposes of the liability for and collection of those
  taxes.
         SECTION 33.  This Act takes effect September 1, 2007.
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
 
         I certify that H.B. No. 3693 was passed by the House on May
  10, 2007, by the following vote:  Yeas 141, Nays 0, 2 present, not
  voting; that the House refused to concur in Senate amendments to
  H.B. No. 3693 on May 25, 2007, and requested the appointment of a
  conference committee to consider the differences between the two
  houses; and that the House adopted the conference committee report
  on H.B. No. 3693 on May 28, 2007, by the following vote:  Yeas 140,
  Nays 2, 3 present, not voting.
 
  ______________________________
  Chief Clerk of the House   
 
         I certify that H.B. No. 3693 was passed by the Senate, with
  amendments, on May 23, 2007, by the following vote:  Yeas 31, Nays
  0; at the request of the House, the Senate appointed a conference
  committee to consider the differences between the two houses; and
  that the Senate adopted the conference committee report on H.B. No.
  3693 on May 26, 2007, by the following vote:  Yeas 30, Nays 0.
 
  ______________________________
  Secretary of the Senate   
  APPROVED: __________________
                  Date       
   
           __________________
                Governor