The bill would make various changes to the Texas Emissions Reduction Plan (TERP) program in Health and Safety Code, Chapters 386, 391, 393, and 394. The bill adds existing programs to the list of programs in Health and Safety Code, Section 386.051 (b), as well as new programs established by the bill.

The bill would delete the energy efficiency grant program from the list of programs eligible for TERP grants. It would also delete the statutory language establishing the energy efficiency grant program.

The bill would allow the TCEQ to establish a different minimum percentage for the reduction of emissions than the main program standards for projects to convert heavy-duty on-road and stationary diesel engines from diesel fuel to dual-fuel operation using natural gas and diesel fuel. The bill also would authorize the commission to consider certified test data to confirm the reductions in nitrogen oxide and other pollutants, if the certification requirements for the conversion systems do not make it possible to fully account for the emissions reductions.
 
The bill would provide that under the New Technology Implementation Grants (NTIG) program that electricity storage projects include projects to store electricity produced from wind and solar generation that provide an efficient means of making the stored energy available during periods of peak energy use.
 
The bill would provide authority to the Texas Commission on Environmental Quality (TCEQ) under the TERP program to establish and administer other programs, in addition to those specifically listed, determined by the TCEQ as necessary or effective in fulfilling the agency's duties and objectives under the TERP. The TCEQ would be directed to place a priority on programs to address two particular goals: (1) reduction of emissions of nitrogen oxides (NOX) and/or particulate matter (PM) at port facilities in nonattainment areas; and (2) reduction of emissions from drilling equipment and related heavy-duty non-road equipment in oil and gas production fields.
 
The bill would revise the Light-Duty Motor Vehicle Purchase or Lease Incentive (LDMVPLI) program within the TERP program. It would: change responsibility for administering the program from the Comptroller to the TCEQ; provide for rebates of $2,500 for the purchase of an eligible vehicle; provide that eligible vehicles would be limited to new light-duty motor vehicles powered by a dedicated or bi-fuel compressed natural gas (CNG) or liquefied petroleum gas (LPG) engine, or an electric drive; and remove the requirement for manufacturers to provide a report on eligible vehicles to the TCEQ. A maximum of 2,000 rebates for CNG and LPG vehicles and 2,000 rebates for electric drive vehicles may be funded for the state fiscal biennium beginning on September 1, 2013. The subchapter that establishes the light-duty motor vehicle purchase or lease incentive program would expire on August 31, 2015.

The bill would create the new Drayage Truck Incentive Program within the TERP program to provide rebate-type funding for the replacement of a pre-2007 model year drayage truck with a 2010 or newer model year truck. According to the bill's provisions, a drayage truck is defined as a truck that transports a load to or from a seaport or rail yard. The TCEQ would be required to develop a purchase incentive program to encourage owners to replace pre-2007 model year drayage trucks with newer drayage trucks and to adopt rules necessary to implement the program. Replacement trucks would be required to be registered in Texas and operated at least 50 percent of annual use at a seaport or rail yard in a nonattainment area. Replaced vehicles and engines would be required to be destroyed, and grants would be authorized to cover up to 80 percent of the purchase price of the drayage truck.
 
The bill would require the State Energy Conservation Office (SECO), in cooperation with the Energy Systems Laboratory, to provide an annual report to the commission that, by county quantifies the reductions of energy demand, peak loads, and associated emissions of air contaminants achieved from the projects awarded a grant. The bill would also require the Public Utility Commission (PUC) to include information on energy efficiency programs implemented by the SECO in the report to the TCEQ on implementation of energy efficiency programs by the PUC.

The bill would amend the allocation listing of funding from the General Revenue-Dedicated TERP Account No. 5071, consolidating the existing language authorizing use of the TERP Account No. 5071 for the various TERP programs into one section. Changes would include the establishment of a 3 percent allocation for the NTIG program, of which at least $1 million would be set aside for energy storage projects. Under current law, the NTIG program does not receive a percentage allocation of the TERP Account No. 5071 funds; instead, it is authorized to receive a "specified amount." TCEQ administrative costs, which receive a maximum of $3.4 million under current law, would receive at least $4 million and up to 4 percent of funds from the TERP Account No. 5071, up to a maximum of $7 million, whichever is greater. The Drayage Truck Incentive program would receive at least two percent and up to four percent of funding from the TERP Account No. 5071. The existing LDMVPLI program, which receives no allocation under current law, would receive a five percent allocation of TERP Account No. 5071 funding, while the Diesel Emissions Reduction Incentive program would receive the remaining balance of the total appropriations out of the account. The bill would also provide for other programs created by the TCEQ to receive funds from the TERP Account No. 5071, if such funds are appropriated by the legislature.

The bill would define "agricultural product transportation," and direct the TCEQ to provide specific eligibility requirements for such projects under the Texas Clean Fleet Program and the Texas Natural Gas Vehicle program.

The bill also would make changes to the existing NTIG program, the Texas Clean Fleet program, the Texas Natural Gas Vehicle program, the Clean Transportation Triangle program, and the Alternative Fueling Facilities program, and it would revise various TERP-related reporting requirements.

Although the bill does not specify dollar amounts to be allocated to each TERP program, this estimate assumes that an additional $25.6 million over 2012-13 expended/budgeted levels would be appropriated out of the TERP Account No. 5071 to the TCEQ to accommodate the new programs established by the bill and provide funding for existing TERP programs which currently receive no funding, but would have funding allocations established by the bill. This assumes that the intention of the bill is not to reduce current allocations, but rather to provide new allocations to the new programs and to the programs that in 2013 did not receive funding. This assumption would bring TCEQ's annual TERP Account No. 5071 funding levels to $90.8 million.  This level of cost is an estimate, and intended to illustrate how the allocation could be executed.

Because the bill increases the minimum TERP Account No. 5071 allocation for TCEQ administration to $4.0 million per year, and the agency currently receives $3.2 million per year, it is assumed that an additional $0.8 million would be provided for administration. This analysis assumes that additional funding would provide for an increase of 10.0 FTEs over 2012-13 levels.

The following programs, which received no funding allocations out of the TERP Account No. 5071 during the 2012-13 biennium, would receive the following annual allocations during 2014-15, based on the $90.8 million annual funding level and the minimum statutory allocations that would be established by the bill: the NTIG program--$2.7 million; the Drayage Truck Incentive program--$1.8 million; and the LDMVPLI program--$4.5 million. The Diesel Emissions Reduction Incentive program's share of funding would be $45.1 million. Because the LDMVPLI program would expire after fiscal year 2015, there would be no allocation for this program beginning in fiscal year 2016, and the Diesel Emissions Reduction Incentive program's funding allocation would thus increase by $4.5 million annually beginning in fiscal year 2016.

This estimate assumes there would be no significant fiscal impact as a result of the elimination of the energy efficiency grant program because, although the program has existed in statute since the inception of the TERP program, the energy efficiency grant program has never actually been implemented.  

No significant fiscal implications are expected with respect to the bill's provisions relating to SECO, the PUC, and the Energy Systems Laboratory operated by the Texas Engineering Experiment Station.