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  81R34885 TJS-D
 
  By: Fraser, et al. S.B. No. 545
 
  Substitute the following for S.B. No. 545:
 
  By:  Crabb C.S.S.B. No. 545
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the creation of a distributed and wholesale solar
  generation incentive program and to encouraging the use of solar
  energy devices.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  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, 39.904, 39.9051,
  39.9052, [and] 39.914(e), and 39.9156, 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 2.  Subchapter Z, Chapter 39, Utilities Code, is
  amended by adding Section 39.9155 to read as follows:
         Sec. 39.9155.  SOLAR GENERATION INCENTIVE PROGRAM. (a)  In
  this section:
               (1)  "Distributed solar generation" means distributed
  renewable generation, as defined by Section 39.916, using solar
  energy technology.
               (2)  "Owner of distributed solar generation" includes a
  retail electric customer who contracts with another person to
  install or maintain distributed solar generation on the customer's
  side of the meter, regardless of whether the customer takes
  ownership of the installed distributed solar generation.
               (3)  "Surplus electricity" means electricity generated
  by distributed solar generation that is not consumed at the place
  the distributed solar generation is installed but flows onto the
  electric distribution system.
         (b)  It is the goal of the legislature that electric
  utilities administer incentive programs for residential and
  commercial customers to increase the amount of distributed solar
  generation and wholesale solar generation installed within the
  state in a cost-effective, market-neutral, and nondiscriminatory
  manner, with a goal of installing at least 3,000 megawatts of solar
  generation capacity in this state by 2020, at least 1,000 megawatts
  of which must be distributed renewable generation. It is the intent
  of the legislature that the incentive program be developed and
  administered in a manner that, to the greatest extent practicable,
  creates employment opportunities for residents of this state.
         (c)  The commission by rule shall:
               (1)  establish a solar generation incentive program, to
  be implemented by electric utilities;
               (2)  oversee the implementation of the program required
  by Subdivision (1);
               (3)  establish procedures to achieve the goal described
  by Subsection (b); and
               (4)  provide for:
                     (A)  deferral of the costs of complying with the
  requirements of this section by a utility that is unable to
  implement the nonbypassable fees allowed by Subsection (d)(1)
  because of a rate freeze; and
                     (B)  recovery of the costs on expiration of the
  rate freeze.
         (d)  The rules adopted under Subsection (c) must include
  provisions for:
               (1)  recovery of the cost of electric utility programs
  authorized by this section through nonbypassable fees of:
                     (A)  $0.000650 per kilowatt hour for each
  residential or commercial customer meter; and
                     (B)  $40 per month for each industrial customer
  meter;
               (2)  rebates to defray the cost of installing solar
  generation as provided by Subsection (f);
               (3)  the wholesale solar provisions described by
  Subsection (g); and
               (4)  eliminating the incentives provided by this
  subsection on the date the goals established by Subsection (b) are
  achieved.
         (e)  Except as provided by Subsection (l), electric
  utilities may not assess the fees authorized by this section after
  the fifth anniversary of the date the program required by this
  section is established by commission rule. The commission shall
  ensure that all fees collected under this section are used for the
  programs authorized by this section, except that utilities may not
  use more than 2.5 percent of the fees collected for administrative
  expenses related to this section, as approved by the commission.
         (f)  The commission shall set rebate amounts for the
  installation of solar generation. The commission shall
  periodically adjust the rebate amounts such that the quantity of
  solar generation installed under this section is maximized, but
  shall reduce rebate amounts by not less than five percent per year.
  To the extent allowed by law, the commission shall set a higher
  rebate amount for solar generation manufactured wholly or
  substantially in this state, provided that the higher amount is not
  more than 20 percent higher than the rebate applicable to all other
  solar generation. The commission may provide for rebates to be
  provided directly to customers or to qualified installers of solar
  generation.  Unless otherwise adjusted by the commission, the
  initial rebate amounts are:
               (1)  $2.40 per watt for installation of distributed
  renewable generation with a capacity of not more than 10 kilowatts;
               (2)  $1.50 per watt for installation of distributed
  renewable generation with a capacity of more than 10 but not more
  than 2,000 kilowatts; and
               (3)  $1 per watt for installation of wholesale or
  industrial generation.
         (g)  If the demand for rebates under this section for
  wholesale generation exceeds the money available for those
  installations, the commission shall consider the following in
  determining which projects receive rebates:
               (1)  projects that require the lowest amount per
  megawatt installed of subsidy to be commercially viable;
               (2)  projects that use the transmission capacity built
  under Section 39.904(g) and require minimal additional
  transmission facilities;
               (3)  projects that enhance the reliability of the
  transmission and distribution grid or defer the need for additional
  transmission and distribution infrastructure;
               (4)  projects in development that can use rebates
  awarded to secure additional financing for that project;
               (5)  projects that provide maximum output during
  periods when electricity demand is highest in this state;
               (6)  projects that can provide ancillary services to
  the electric grid;
               (7)  projects with the potential to improve ambient air
  quality in areas designated by the United States Environmental
  Protection Agency as nonattainment areas under Section 107(d) of
  the federal Clean Air Act (42 U.S.C. Section 7407); and
               (8)  projects with the potential to place this state in
  a leadership position for emerging solar technology research or
  development.
         (h)  For the first 24 months of the program, the commission
  shall reserve 25 percent of the rebates available for installation
  of distributed renewable generation for use by public school
  districts in this state.  The interested districts must obtain
  funding for the balance of the installation cost not later than 90
  days after filing an application with the commission. If the 25
  percent reservation provided under this subsection is fully used
  before the expiration of the 24-month period, the commission may
  continue to reserve for an additional 24 months 25 percent of the
  available rebates.
         (i)  Notwithstanding any other provision of this title, a
  retail electric provider or any other person may own distributed
  solar generation and enter into a contract with the retail customer
  on whose property the generation is located to lease the generation
  or sell the output to the retail customer or to the customer's
  retail electric provider.  The owner of the generation is not an
  electric utility and is not required to register with the
  commission as a power generation company or self generator unless
  the commission determines that such registration is necessary to
  maintain the reliability of the distribution grid. The commission
  may establish appropriate reporting requirements for trading
  renewable energy credits.  An area of this state in which a
  distributed renewable generation owner sells output as provided by
  this subsection is not for that reason considered an area in which
  customer choice has been introduced.  Not more than 25 percent of
  the annual program budget may be allocated to rebates awarded to
  retail electric providers for distributed renewable generation
  installed on retail customers' property as described by this
  subsection.
         (j)  The commission, in consultation with the Electric
  Reliability Council of Texas, shall prepare and make available a
  study indicating geographic areas where utility scale non-wind
  renewable energy can be located with minimal additional
  transmission facilities.
         (k)  Selection of projects by the commission under
  Subsection (g) is not required to be conducted as a contested case
  proceeding.  The commission may appoint an advisory committee to
  assist the commission in evaluating proposals made under Subsection
  (g), provided, however, that members of the committee may not have a
  financial interest in any of the proposals. After conclusion of a
  process authorized by Subsection (g), the commission shall release
  a complete record of the proposals and the evaluation of the factors
  required to be considered under Subsection (g).
         (l)  The commission may extend the fees and program
  authorized by this section for an additional five years if the
  commission finds that a substantial amount of manufacturing of
  solar generation products has located in Texas after the initial
  five-year program and that the extension of the fees does not
  present an undue burden to customers.
         (m)  Notwithstanding any other law, this section applies to
  every electric utility in this state.
         SECTION 3.  Subchapter Z, Chapter 39, Utilities Code, is
  amended by adding Section 39.9156 to read as follows:
         Sec. 39.9156.  SOLAR GENERATION INCENTIVE PROGRAMS.  (a)  It
  is the goal of the legislature that:
               (1)  electric cooperatives and municipally owned
  utilities administer incentive programs that increase the amount of
  solar generation installed in this state in a cost-effective,
  market-neutral, and nondiscriminatory manner;
               (2)  customers of electric cooperatives and
  municipally owned utilities will have access to incentives for the
  installation of distributed solar generation; and
               (3)  electric cooperatives and municipally owned
  utilities expend funds to increase the amount of solar generation
  at a total funding level consistent with the requirements for
  electric utilities in this state under Sections 39.9155(d)(1) and
  (e).
         (b)  This section applies only to an electric cooperative or
  municipally owned utility with retail sales of more than 500,000
  megawatt hours in 2007.
         (c)  Beginning not later than September 1, 2012, a
  municipally owned utility or electric cooperative must report
  annually to the state energy conservation office, in a form and
  manner determined by the office, information regarding the efforts
  of the municipally owned utility or electric cooperative related to
  this section.
         (d)  This section does not prevent the governing body of an
  electric cooperative or municipally owned utility from adopting
  rules, programs, and incentives to encourage or provide for the
  installation of more solar generation capacity than the goals
  established by Section 39.9155 or rules adopted under that section.
         (e)  An electric cooperative or municipally owned utility
  may recover the costs required by this section through a
  nonbypassable fee consistent with that authorized by the commission
  for electric utilities under Section 39.9155(d)(1) or another cost
  recovery mechanism as determined by the governing body of the
  electric cooperative or municipally owned utility.
         SECTION 4.  Chapter 202, Property Code, is amended by adding
  Section 202.010 to read as follows:
         Sec. 202.010.  REGULATION OF SOLAR ENERGY DEVICES.  (a)  In
  this section, "solar energy device" has the meaning assigned by
  Section 171.107, Tax Code.
         (b)  Except as otherwise provided by this section, a property
  owners' association may not include or enforce a provision in a
  dedicatory instrument that prohibits or restricts a property owner
  from installing a solar energy device.
         (c)  A provision that violates Subsection (b) is void.
         (d)  This section does not prohibit the inclusion or
  enforcement of a provision in a dedicatory instrument that
  prohibits a solar energy device that:
               (1)  threatens the public health or safety;
               (2)  violates a law;
               (3)  is located on property owned or maintained by the
  property owners' association;
               (4)  is located on property owned in common by the
  members of the property owners' association;
               (5)  is located in an area on the property owner's
  property other than:
                     (A)  on the roof of the home; or
                     (B)  in a fenced yard or patio maintained by the
  property owner; or
               (6)  is mounted on a device that is taller or more
  visually obtrusive than is necessary for the solar energy device to
  operate at not less than 90 percent of its rated efficiency.
         SECTION 5.  The heading to Subtitle F, Title 16, Property
  Code, is amended to read as follows:
  SUBTITLE F.  REGULATION [INSPECTION] OF [NEW] RESIDENTIAL
  CONSTRUCTION GENERALLY
         SECTION 6.  The heading to Chapter 446, Property Code, is
  amended to read as follows:
  CHAPTER 446. INSPECTION OF RESIDENTIAL CONSTRUCTION IN
  UNINCORPORATED AREAS AND OTHER AREAS NOT SUBJECT TO MUNICIPAL
  INSPECTIONS
         SECTION 7.  Subtitle F, Title 16, Property Code, is amended
  by adding Chapter 447 to read as follows:
  CHAPTER 447. REQUIREMENTS FOR NEW CONSTRUCTION CONTRACTS
         Sec. 447.001.  SOLAR PANEL OPTION REQUIRED IN CERTAIN
  SUBDIVISIONS. (a)  In this section, "solar energy device" means a
  system or series of mechanisms designed primarily to provide
  heating or cooling or to produce electrical or mechanical power by
  collecting and transferring solar-generated energy. The term
  includes a mechanical or chemical device that has the ability to
  store solar-generated energy for use in heating or cooling or in the
  production of power.
         (b)  This chapter applies only to a contract for construction
  of a new home in a subdivision that contains more than 50 lots on
  which the builder has built or is offering to build new homes.
         (c)  A builder who enters into a contract to which this
  chapter applies shall offer the homebuyer at least one plan in the
  subdivision on which the homebuyer may purchase an option to
  install a solar energy device on the home for heating or cooling or
  for the production of power.
         SECTION 8.  Subchapter D, Chapter 2305, Government Code, is
  amended by adding Section 2305.0321 to read as follows:
         Sec. 2305.0321.  REVOLVING LOAN PROGRAM FOR SOLAR ENERGY
  IMPROVEMENTS. (a)  The energy office shall establish a revolving
  loan program patterned after the loanstar revolving loan program to
  provide loans to pay the costs of installing photovoltaic solar
  panels on and associated energy efficiency improvements to public
  school buildings and buildings owned by religious organizations.
  The energy office shall allocate to the program at least $75 million
  from money available under the American Recovery and Reinvestment
  Act of 2009 (Pub. L. No. 111-5), subject to federal approval of the
  use of that money for the purposes of the program.
         (b)  The energy office by rule shall establish the terms
  under which a loan may be made under the program, including the
  interest rate for repayment of program loans.  A program loan must
  be paid over a 15-year term.
         (c)  Through the program, the energy office shall offer to
  each school district the opportunity to apply for a loan to pay the
  cost of installing photovoltaic solar panels on at least one school
  building of the school district's choice and the cost of associated
  energy efficiency improvements to that building.
         (d)  The energy office by rule shall establish a procedure
  for determining which school district buildings or religious
  organization buildings qualify for a program loan.
         (e)  Each school district that receives a program loan shall
  pay for the principal of and interest on the loan primarily from the
  amount budgeted for the energy costs of the school at which the
  improvements are installed. The school district may make
  additional payments of the principal of or interest on a program
  loan from money rebated to it as compensation for electric energy
  generated by the solar panels or money received as a gift or grant
  for the purpose of paying the loan.
         (f)  In this section, "religious organization" means a
  synagogue, mosque, church, or other institution:
               (1)  the purpose of which is the propagation of
  religious beliefs; and
               (2)  that is exempt from federal income tax under
  Section 501(a) of the Internal Revenue Code of 1986 (26 U.S.C.
  Section 501(a)) by being listed under Section 501(c) of that code
  (26 U.S.C. Section 501(c)).
         SECTION 9.  The Public Utility Commission of Texas shall
  adopt rules establishing the programs required under Sections
  39.9155 and 39.9156, Utilities Code, as added by this Act, as soon
  as practicable.
         SECTION 10.  Section 202.010, Property Code, as added by
  this Act, applies to a deed restriction enacted before, on, or after
  the effective date of this Act.
         SECTION 11.  Chapter 447, Property Code, as added by this
  Act, applies only to a contract for new home construction entered
  into on or after the effective date of this Act. A contract entered
  into before the effective date of this Act is governed by the law in
  effect immediately before the effective date of this Act, and that
  law is continued in effect for that purpose.
         SECTION 12.  The state energy conservation office shall
  establish a program under Section 2305.0321, Government Code, as
  added by this Act, not later than January 1, 2010.
         SECTION 13.  This Act takes effect immediately if it
  receives a vote of two-thirds of all the members elected to each
  house, as provided by Section 39, Article III, Texas Constitution.
  If this Act does not receive the vote necessary for immediate
  effect, this Act takes effect September 1, 2009.