81R3256 JTS-D
 
  By: Hernandez H.B. No. 634
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to establishing a carbon dioxide "cap and trade" program
  to enable participation in the Regional Greenhouse Gas Initiative.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subtitle C, Title 5, Health and Safety Code, is
  amended by adding Chapter 391 to read as follows:
  CHAPTER 391. "CAP AND TRADE" PROGRAM FOR CARBON DIOXIDE
  EMISSIONS FROM CERTAIN ELECTRIC GENERATING
  FACILITIES; REGIONAL GREENHOUSE GAS INITIATIVE
         Sec. 391.001.  DEFINITIONS. In this chapter:
               (1)  "Allowance" means an authorization to emit a
  certain amount of carbon dioxide.
               (2)  "Commission" means the Texas Commission on
  Environmental Quality.
               (3)  "Regional Greenhouse Gas Initiative" means a
  memorandum of understanding dated December 20, 2005, as may be
  amended, and the corresponding model rule, as may be amended, that
  establishes a "cap and trade" program in the northeast region of the
  United States.
         Sec. 391.002.  "CAP AND TRADE" PROGRAM.  (a)  The commission
  in consultation with the Public Utility Commission of Texas by rule
  shall establish a carbon dioxide "cap and trade" program that will
  limit and then reduce the total carbon dioxide emissions released
  by fossil fuel-fired electric generating facilities in this state.
         (b)  The commission's rules establishing the carbon dioxide
  "cap and trade" program shall be designed to:
               (1)  fully comply with the Regional Greenhouse Gas
  Initiative or with another similar initiative as the commission
  determines is best suited for this state; and
               (2)  permit the holders of carbon dioxide allowances to
  trade them in a market to be established through the Regional
  Greenhouse Gas Initiative or other entity as determined by the
  commission.
         (c)  The commission and any other relevant state agency or
  official shall take the steps necessary to allow electric
  generating facilities in this state to participate in a market to
  trade carbon dioxide allowances allocated under the program.
         Sec. 391.003.  AUCTION OF ALLOWANCES. (a) Rules adopted
  under the "cap and trade" program must require that in 2010 at least
  50 percent of all allowances issued under the program be sold
  through an auction open to any person in this state who wishes to
  participate. In the years after 2010, the percentage of allowances
  sold through auction shall be as follows:
               (1)  in 2011, at least 60 percent;
               (2)  in 2012, at least 70 percent;
               (3)  in 2013, at least 80 percent;
               (4)  in 2014, at least 90 percent; and
               (5)  in 2015 and all following years, 100 percent.
         (b)  The proceeds recovered from the allowance auction must
  be used to benefit consumers, balancing short-term and long-term
  benefits. The proceeds may be used only for the following purposes,
  in proportions to be determined by the commission:
               (1)  to promote energy efficiency and conservation;
               (2)  to directly mitigate the adverse effects of the
  program on consumers of electricity; and
               (3)  to promote renewable energy technologies that do
  not produce carbon dioxide emissions.
         (c)  The commission shall determine and specify details for
  implementing the auction of carbon dioxide emission allowances,
  including:
               (1)  the auction's design;
               (2)  the person to conduct and manage the auction; and
               (3)  the timing of the auction in any year relative to
  the dates of the compliance period in the Regional Greenhouse Gas
  Initiative or other market.
         Sec. 391.004.  AUCTION MANAGER. (a) The commission shall:
               (1)  engage a person to serve as auction manager that is
  experienced in auction design and management; or
               (2)  contract with a person to serve as auction manager
  that is determined by the commission to be qualified to design,
  manage, and conduct the auction in a manner that assures the
  efficiency of the auction.
         (b)  The selection process for choosing an auction manager to
  design, manage, and conduct the auction shall include an open and
  public request for proposals. Proposals submitted in response to a
  request under this subsection must include a summary of
  qualifications and experience relevant to designing, managing, and
  conducting the auction.
         (c)  An auction manager selected by the commission may be
  reimbursed only for reasonable costs incurred by the auction
  manager in administering the auction as determined by the
  commission.
         Sec. 391.005.  ALLOWANCES HELD BY AUCTION MANAGER;
  DISTRIBUTION OF AUCTION PROCEEDS. (a) The auction manager selected
  under Section 391.004 shall be authorized to receive, hold, and
  sell carbon dioxide emission allowances.
         (b)  The commission shall convey all allowances to the
  auction manager, who shall collect the auction proceeds and,
  without further appropriation, distribute the proceeds in
  accordance with Section 391.003(b) under commission oversight.
         (c)  The auction manager annually shall submit to the
  commission, not less than six months before the start of the
  auction, a draft proposal on how to allocate the proceeds from the
  auction. The commission shall hold a public hearing, accept public
  comment, and approve, modify, or reject the draft proposal. If the
  commission rejects the proposal, the commission shall work with the
  auction manager to draft an acceptable proposal.
         (d)  The office shall require an annual report from the
  auction manager describing the auction and its results. The
  commission shall make the report public and shall submit the report
  to the appropriate legislative committees.
         Sec. 391.006.  OTHER COMMISSION POWERS AND DUTIES RELATED TO
  CLIMATE-CHANGING SUBSTANCES. The responsibilities created by
  establishing a carbon dioxide "cap and trade" program are in
  addition to all other responsibilities imposed by any other law or
  rule and do not reduce any authority of the commission, including
  the authority to adopt standards and regulations necessary for this
  state to join and participate in a multistate program, at any stage
  in the development and implementation of the program, intended to
  control emissions of carbon dioxide or other substances that are
  determined by the commission to be damaging or altering the
  climate.
         SECTION 2.  Subchapter Z, Chapter 39, Utilities Code, is
  amended by adding Section 39.927 to read as follows:
         Sec. 39.927.  CARBON DIOXIDE "CAP AND TRADE" PROGRAM. The
  commission, in consultation with the Texas Commission on
  Environmental Quality and the attorney general, through the
  commission's authority under this chapter, including the authority
  to review rates, prices, and schedules, shall adopt rules that
  fully implement the carbon dioxide "cap and trade" program
  prescribed by Chapter 391, Health and Safety Code. The commission
  may adopt rules and enter any orders that ensure that the carbon
  dioxide emissions associated with the generation of electric power
  serving the customer load of this state are treated on a
  commercially comparable basis regardless of the location of the
  power stations operating to serve that load.
         SECTION 3.  Not later than January 1, 2010, the Texas
  Commission on Environmental Quality and the Public Utility
  Commission of Texas shall adopt rules to implement Chapter 391,
  Health and Safety Code, as added by this Act.
         SECTION 4.  This Act takes effect September 1, 2009.