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  H.B. No. 1500
 
 
 
 
AN ACT
  relating to the continuation and functions of the Public Utility
  Commission of Texas and the Office of Public Utility Counsel, and
  the functions of the independent organization certified for the
  ERCOT power region; increasing an administrative penalty.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 12.005, Utilities Code, is amended to
  read as follows:
         Sec. 12.005.  APPLICATION OF SUNSET ACT. The Public Utility
  Commission of Texas is subject to Chapter 325, Government Code
  (Texas Sunset Act). Unless continued in existence as provided by
  that chapter or by Chapter 39, the commission is abolished [and this
  title expires] September 1, 2029 [2023].
         SECTION 2.  Section 12.059, Utilities Code, is amended to
  read as follows:
         Sec. 12.059.  TRAINING PROGRAM FOR COMMISSIONERS. (a) A
  person who is appointed to and qualifies for office as a member of
  the commission may not vote, deliberate, or be counted as a member
  in attendance at a meeting of the commission until the person
  completes a [Before a commissioner may assume the commissioner's
  duties and before the commissioner may be confirmed by the senate,
  the commissioner must complete at least one course of the] training
  program that complies with [established under] this section.
         (b)  The [A] training program must [established under this
  section shall] provide the person with information [to the
  commissioner] regarding:
               (1)  the law governing [enabling legislation that
  created the] commission operations [and its policymaking body to
  which the commissioner is appointed to serve];
               (2)  the programs, functions, rules, and budget of
  [operated by] the commission;
               (3)  the scope [role and functions] of and limitations
  on the rulemaking authority of the commission;
               (4)  the results [rules] of the most recent formal
  audit of the commission [with an emphasis on the rules that relate
  to disciplinary and investigatory authority];
               (5)  the requirements of:
                     (A)  laws relating to open meetings, public
  information, administrative procedure, and disclosing conflicts of
  interest; and
                     (B)  other laws applicable to members of a state
  policy-making body in performing their duties [current budget for
  the commission]; and
               (6)  [the results of the most recent formal audit of the
  commission;
               [(7)  the requirements of Chapters 551, 552, and 2001,
  Government Code;
               [(8)  the requirements of the conflict of interest laws
  and other laws relating to public officials; and
               [(9)]  any applicable ethics policies adopted by the
  commission or the Texas Ethics Commission.
         (c)  A person [who is] appointed to the commission is
  entitled to reimbursement, as provided by the General
  Appropriations Act, for the travel expenses incurred in attending
  the training program regardless of whether the attendance at the
  program occurs before or after the person qualifies for office.
         (d)  The executive director of the commission shall create a
  training manual that includes the information required by
  Subsection (b). The executive director shall distribute a copy of
  the training manual annually to each member of the commission. Each
  member of the commission shall sign and submit to the executive
  director a statement acknowledging that the member received and has
  reviewed the training manual.
         SECTION 3.  Section 12.202, Utilities Code, is amended by
  adding Subsections (a-1) and (a-2) to read as follows:
         (a-1)  The policies adopted under this section must require
  the agenda for each regular commission meeting to include public
  testimony as a meeting agenda item and allow members of the public
  to comment on:
               (1)  each meeting agenda item unrelated to a contested
  case; and
               (2)  other matters under the commission's jurisdiction.
         (a-2)  The commission may prohibit public comment at a
  regular commission meeting on a meeting agenda item related to a
  contested case.
         SECTION 4.  Section 12.203, Utilities Code, is amended to
  read as follows:
         Sec. 12.203.  BIENNIAL REPORT. (a) Not later than January
  15 of each odd-numbered year, the commission shall prepare a
  written report that includes:
               (1)  suggestions regarding modification and
  improvement of the commission's statutory authority and for the
  improvement of utility regulation in general, including the
  regulation of water and sewer service under Chapter 13, Water Code,
  that the commission considers appropriate for protecting and
  furthering the interest of the public;
               (2)  a report on the scope of competition in the
  electric and telecommunications markets that includes:
                     (A)  an assessment of:
                           (i)  the effect of competition and industry
  restructuring on customers in both competitive and noncompetitive
  electric markets; and
                           (ii)  the effect of competition on the rates
  and availability of electric services for residential and small
  commercial customers;
                     (B)  an assessment of the effect of competition
  on:
                           (i)  customers in both competitive and
  noncompetitive telecommunications markets, with a specific focus
  on rural markets; and
                           (ii)  the rates and availability of
  telecommunications services for residential and business
  customers, including any effects on universal service; and
                     (C)  a summary of commission action over the
  preceding two years that reflects changes in the scope of
  competition in regulated electric and telecommunications markets;
  and
               (3)  recommendations for legislation that the
  commission determines appropriate to promote the public interest in
  the context of partially competitive electric and
  telecommunications markets.
         (b)  A telecommunications utility, as defined by Section
  51.002, shall cooperate with the commission as necessary for the
  commission to satisfy the requirements of this section.
         SECTION 5.  Subchapter E, Chapter 12, Utilities Code, is
  amended by adding Section 12.205 to read as follows:
         Sec. 12.205.  STRATEGIC COMMUNICATIONS PLAN. The commission
  shall:
               (1)  develop an agency-wide plan for:
                     (A)  improving the effectiveness of commission
  communications with the public, market participants, and other
  relevant audiences; and 
                     (B)  responding to changing communications needs;
               (2)  include in the plan required by Subdivision (1)
  goals, objectives, and metrics to assess commission efforts; and
               (3)  update the plan required by Subdivision (1) at
  least once every two years.
         SECTION 6.  Section 13.002, Utilities Code, is amended to
  read as follows:
         Sec. 13.002.  APPLICATION OF SUNSET ACT. The Office of
  Public Utility Counsel is subject to Chapter 325, Government Code
  (Texas Sunset Act). Unless continued in existence as provided by
  that chapter, the office is abolished [and this chapter expires]
  September 1, 2029 [2023].
         SECTION 7.  Sections 15.023(b-1) and (f), Utilities Code,
  are amended to read as follows:
         (b-1)  Notwithstanding Subsection (b), the penalty for a
  violation of a voluntary mitigation plan entered into under
  Subsection (f) or of a provision of Section 35.0021 or 38.075 may be
  in an amount not to exceed $1,000,000 for a violation.  Each day a
  violation continues or occurs is a separate violation for purposes
  of imposing a penalty.
         (f)  The commission and a person may develop and enter into a
  voluntary mitigation plan relating to a violation of Section 39.157
  or rules adopted by the commission under that section. The
  commission may approve the plan only if the commission determines
  that the plan is in the public interest.  The voluntary mitigation
  plan must be reviewed at least once every two years and not later
  than the 90th day after the implementation date of a wholesale
  market design change. As part of the review, the commission must
  determine whether the voluntary mitigation plan remains in the
  public interest. If the commission determines that the voluntary
  mitigation plan is no longer in the public interest, the commission
  and the person must agree to a modification of the plan or the
  commission must terminate the plan.  Adherence [If the commission
  and a person enter into a voluntary mitigation plan, adherence] to
  the plan must be considered in determining whether a violation
  occurred and, if so, the penalty to be assessed [constitutes an
  absolute defense against an alleged violation with respect to
  activities covered by the plan].
         SECTION 8.  Subchapter A, Chapter 35, Utilities Code, is
  amended by adding Section 35.0022 to read as follows:
         Sec. 35.0022.  SERVICE INTERRUPTION NOTIFICATIONS. (a)  
  This section applies only to a provider of electric generation
  service described by Section 35.0021(a).
         (b)  The commission by rule shall require a provider of
  electric generation service to provide to the independent
  organization certified under Section 39.151 for the ERCOT power
  region the reason for each unplanned service interruption. Not
  later than the third business day after the service is restored, the
  independent organization shall include the reason for each
  unplanned service interruption in a publicly available report
  published on the independent organization's Internet website.
         SECTION 9.  Section 35.004, Utilities Code, is amended by
  amending Subsection (d) and adding Subsections (d-1), (d-2), and
  (d-3) to read as follows:
         (d)  The commission shall price wholesale transmission
  services within ERCOT based on the postage stamp method of pricing
  under which a transmission-owning utility's rate is based on the
  ERCOT utilities' combined annual costs of transmission, other than
  costs described by Subsections (d-2) and (d-3), divided by the
  total demand placed on the combined transmission systems of all
  such transmission-owning utilities within a power region. An
  electric utility subject to the freeze period imposed by Section
  39.052 may treat transmission costs in excess of transmission
  revenues during the freeze period as an expense for purposes of
  determining annual costs in the annual report filed under Section
  39.257. Notwithstanding Section 36.201, the commission may approve
  wholesale rates that may be periodically adjusted to ensure timely
  recovery of transmission investment. Notwithstanding Section
  36.054(a), if the commission determines that conditions warrant the
  action, the commission may authorize the inclusion of construction
  work in progress in the rate base for transmission investment
  required by the commission under Section 39.203(e).
         (d-1)  The commission by rule shall establish a reasonable
  allowance for transmission-owning utility costs incurred to
  interconnect generation resources directly with the ERCOT
  transmission system at transmission voltage. The allowance must
  take into account:
               (1)  the potential to reduce the costs to consumers of
  generation interconnection;
               (2)  historical generation interconnection costs; and
               (3)  any other factor that the commission considers
  reasonable to accomplish the goal of this subsection.
         (d-2)  Costs in excess of the transmission-owning utility
  allowance provided by Subsection (d-1) incurred to interconnect
  generation resources with the ERCOT transmission system must be
  directly assigned to and collected from the generation resource
  interconnecting through the facilities.
         (d-3)  Not later than September 1 of every fifth year, the
  commission shall review and may adjust the allowance provided by
  Subsection (d-1) to account for inflation or supply chain issues.
         SECTION 10.  Section 36.053(d), Utilities Code, is amended
  to read as follows:
         (d)  If the commission issues a certificate of convenience
  and necessity or if the commission, acting under the authority
  formerly provided by Section 39.203(e), ordered [orders] an
  electric utility or a transmission and distribution utility to
  construct or enlarge transmission or transmission-related
  facilities to facilitate meeting the goal for generating capacity
  from renewable energy technologies under former Section 39.904(a),
  the commission shall find that the facilities are used and useful to
  the utility in providing service for purposes of this section and
  are prudent and includable in the rate base, regardless of the
  extent of the utility's actual use of the facilities.
         SECTION 11.  Section 37.0541, Utilities Code, is amended to
  read as follows:
         Sec. 37.0541.  CONSOLIDATION OF CERTAIN PROCEEDINGS. The
  commission shall consolidate the proceeding on an application to
  obtain or amend a certificate of convenience and necessity for the
  construction of a transmission line with the proceeding on another
  application to obtain or amend a certificate of convenience and
  necessity for the construction of a transmission line if it is
  apparent from the applications or a motion to intervene in either
  proceeding that the transmission lines that are the subject of the
  separate proceedings share a common point of interconnection.
  [This section does not apply to a proceeding on an application for a
  certificate of convenience and necessity for a transmission line to
  serve a competitive renewable energy zone as part of a plan
  developed by the commission under Section 39.904(g)(2).]
         SECTION 12.  Sections 37.056(c) and (d), Utilities Code, are
  amended to read as follows:
         (c)  The commission shall grant each certificate on a
  nondiscriminatory basis after considering:
               (1)  the adequacy of existing service;
               (2)  the need for additional service;
               (3)  the effect of granting the certificate on the
  recipient of the certificate and any electric utility serving the
  proximate area; and
               (4)  other factors, such as:
                     (A)  community values;
                     (B)  recreational and park areas;
                     (C)  historical and aesthetic values;
                     (D)  environmental integrity; and
                     (E)  the probable improvement of service or
  lowering of cost to consumers in the area if the certificate is
  granted, including any potential economic or reliability benefits
  associated with dual fuel and fuel storage capabilities in areas
  outside the ERCOT power region[; and
                     [(F)  to the extent applicable, the effect of
  granting the certificate on the ability of this state to meet the
  goal established by Section 39.904(a) of this title].
         (d)  The commission by rule shall establish criteria, in
  addition to the criteria described by Subsection (c), for granting
  a certificate for a transmission project that serves the ERCOT
  power region and[,] that is not necessary to meet state or federal
  reliability standards[, and that is not included in a plan
  developed under Section 39.904(g)]. The criteria must include a
  comparison of the estimated cost of the transmission project for
  consumers and the estimated congestion cost savings for consumers
  that may result from the transmission project, considering both
  current and future expected congestion levels and the transmission
  project's ability to reduce those congestion levels. The
  commission shall include with its decision on an application for a
  certificate to which this subsection applies findings on the
  criteria.
         SECTION 13.  Subchapter D, Chapter 38, Utilities Code, is
  amended by adding Section 38.078 to read as follows:
         Sec. 38.078.  CIRCUIT SEGMENTATION STUDY AND COST RECOVERY.
  (a) Not later than September 15, 2023, the commission shall direct
  each transmission and distribution utility to perform a circuit
  segmentation study.
         (b)  A circuit segmentation study must:
               (1)  use an engineering analysis to examine whether and
  how the transmission and distribution utility's transmission and
  distribution systems can be segmented and sectionalized to manage
  and rotate outages more evenly across all customers and circuits,
  while maintaining the protections offered to critical facilities;
               (2)  include an engineering analysis of the feasibility
  of using sectionalization, automated reclosers, and other
  technology to break up the circuits that host significant numbers
  of critical facilities into smaller segments for outage management
  purposes to enable more granular and flexible outage management;
               (3)  identify feeders with critical facilities that, if
  equipped with facility-specific backup power systems and
  segmentation, can enhance the utility's outage management
  flexibility; and
               (4)  include an estimate of the time, capital cost, and
  expected improvements to load-shed management associated with the
  circuit segmentation study.
         (c)  Each transmission and distribution utility shall submit
  a report of the conclusions of the utility's study to the commission
  not later than September 1, 2024.
         (d)  The commission shall review each circuit segmentation
  study not later than March 15, 2025.
         SECTION 14.  Section 39.002, Utilities Code, as amended by
  Chapters 908 (H.B. 4492) and 950 (S.B. 1580), Acts of the 87th
  Legislature, Regular Session, 2021, is reenacted and amended to
  read as follows:
         Sec. 39.002.  APPLICABILITY. This chapter, other than
  Sections 39.151, 39.1516, 39.155, 39.157(e), 39.159, 39.160,
  39.203, [39.904,] 39.9051, 39.9052, and 39.914(e), and Subchapters
  M and N, does not apply to a municipally owned utility or an
  electric cooperative. Sections 39.157(e) and[,] 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 15.  Section 39.151, Utilities Code, is amended by
  amending Subsections (d), (g-1), and (g-6) and adding Subsection
  (g-7) to read as follows:
         (d)  The commission shall adopt and enforce rules relating to
  the reliability of the regional electrical network and accounting
  for the production and delivery of electricity among generators and
  all other market participants, or may delegate those
  responsibilities to an independent organization [responsibilities
  for adopting or enforcing such rules. Rules adopted by an
  independent organization and enforcement actions taken by the
  organization under delegated authority from the commission are
  subject to commission oversight and review and may not take effect
  before receiving commission approval]. An independent organization
  certified by the commission is directly responsible and accountable
  to the commission. The commission has complete authority to
  oversee and investigate the independent organization's finances,
  budget, and operations as necessary to ensure the organization's
  accountability and to ensure that the organization adequately
  performs the organization's functions and duties. The independent
  organization shall fully cooperate with the commission in the
  commission's oversight and investigatory functions. The
  commission may take appropriate action against an independent
  organization that does not adequately perform the organization's
  functions or duties or does not comply with this section, including
  decertifying the organization or assessing an administrative
  penalty against the organization. The commission by rule shall
  adopt procedures governing decertification of an independent
  organization, selecting and certifying a successor organization,
  and transferring assets to the successor organization to ensure
  continuity of operations in the region. The commission may not
  implement, by order or by rule, a requirement that is contrary to an
  applicable federal law or rule.
         (g-1)  The [independent organization's] bylaws of an
  independent organization certified for the ERCOT power region [or
  protocols] must be approved by [the commission] and [must] reflect
  the input of the commission. The bylaws must require that every
  member of the governing body be a resident of this state and must
  prohibit a legislator from serving as a member. The governing body
  must be composed of:
               (1)  two members [the chairman] of the commission as
  [an] ex officio nonvoting members:
                     (A)  one of whom must be the presiding officer of
  the commission; and
                     (B)  one of whom must be designated by the
  presiding officer of the commission to serve a one-year term on the
  governing body [member];
               (2)  the counsellor as an ex officio voting member
  representing residential and small commercial consumer interests;
               (3)  the chief executive officer of the independent
  organization as an ex officio nonvoting member; and
               (4)  eight members selected by the selection committee
  under Section 39.1513 with executive-level experience in any of the
  following professions:
                     (A)  finance;
                     (B)  business;
                     (C)  engineering, including electrical
  engineering;
                     (D)  trading;
                     (E)  risk management;
                     (F)  law; or
                     (G)  electric market design.
         (g-6)  In this subsection, a reference to a protocol includes
  a rule. Protocols adopted by an independent organization and
  enforcement actions taken by the organization under delegated
  authority from the commission are subject to commission oversight
  and review and may not take effect before receiving commission
  approval. To maintain certification as an independent organization
  under this section, the organization's governing body must
  establish and implement a formal process for adopting new protocols
  or revisions to existing protocols. The process must require that
  new or revised protocols may not take effect until the commission
  approves a market impact statement describing the new or revised
  protocols. The commission may approve, reject, or remand with
  suggested modifications to the independent organization's
  governing body protocols adopted by the organization.
         (g-7)  The presiding officer of the commission shall
  designate commissioners to serve terms on the independent
  organization's governing body under Subsection (g-1)(1)(B) in the
  order in which the commissioners were first appointed to the
  commission. A commissioner may not serve an additional term until
  each commissioner has served a term.
         SECTION 16.  Section 39.1511, Utilities Code, is amended by
  amending Subsection (a) and adding Subsection (a-1) to read as
  follows:
         (a)  Meetings of the governing body of an independent
  organization certified under Section 39.151 and meetings of a
  subcommittee that includes a member of the governing body must be
  open to the public. The bylaws of the independent organization and
  the rules of the commission may provide for the governing body or
  subcommittee to enter into executive session closed to the public
  only to address risk management or a matter that the independent
  organization would be authorized to consider in a closed meeting if
  the independent organization were governed under Chapter 551,
  Government Code [sensitive matters such as confidential personnel
  information, contracts, lawsuits, competitively sensitive
  information, or other information related to the security of the
  regional electrical network].
         (a-1)  An independent organization's governing body or a
  subcommittee may adopt a policy allowing the governing body or
  subcommittee to enter into an executive session closed to the
  public and commissioners, including the commissioners serving as ex
  officio nonvoting members, only to address a contested case, as
  defined by Section 2001.003, Government Code, or a personnel matter
  that is unrelated to members of the governing body.
         SECTION 17.  Subchapter D, Chapter 39, Utilities Code, is
  amended by adding Section 39.1514 to read as follows:
         Sec. 39.1514.  COMMISSION DIRECTIVES TO INDEPENDENT
  ORGANIZATION. (a) The commission may not use a verbal directive
  to direct an independent organization certified under Section
  39.151 to take an official action. The commission may direct the
  organization to take an official action only through:
               (1)  a contested case;
               (2)  rulemaking; or
               (3)  a memorandum or written order adopted by a
  majority vote.
         (a-1)  The commission must use a contested case or rulemaking
  process to direct an independent organization certified under
  Section 39.151 to take an official action that will create a new
  cost or fee, increase an existing cost or fee, or impose significant
  operational obligations on an entity.
         (b)  The commission by rule shall:
               (1)  specify the types of directives the commission may
  issue through a contested case, rulemaking, memorandum, or written
  order, in accordance with Subsection (a-1);
               (2)  require that proposed commission directives be
  included as an item on a commission meeting agenda and require the
  commission to allow members of the public an opportunity to comment
  on the agenda item; and
               (3)  establish a reasonable timeline for the release
  before a commission meeting of discussion materials relevant to
  any proposed commission directives included as agenda items for
  that meeting.
         (c)  Notwithstanding another provision of this section, the
  commission may use a verbal directive to direct an independent
  organization to take an official action in an urgent or emergency
  situation that poses an imminent threat to public health, public
  safety, or the reliability of the power grid.  If the commission
  uses a verbal directive, the commission shall provide written
  documentation of the directive to the independent organization not
  later than 72 hours after the urgent or emergency situation ends.  
  The commission by rule shall establish criteria for determining
  whether a situation is urgent or an emergency under this subsection
  and establish a process by which the commission will issue
  directives to the independent organization under this subsection.
         SECTION 18.  Section 39.1515, Utilities Code, is amended by
  amending Subsections (a) and (f) and adding Subsection (i) to read
  as follows:
         (a)  An independent organization certified under Section
  39.151 shall contract with an entity selected by the commission to
  act as the commission's wholesale electric market monitor to detect
  and prevent market manipulation strategies, [and] recommend
  measures to enhance the efficiency of the wholesale market, and
  provide independent analysis of any material changes proposed to
  the wholesale market. The commission may not restrict the market
  monitor from appearing or speaking before or providing analysis to
  the legislature. The independent organization may not
  substantially modify the market monitor's contract unless the
  modification is approved by a majority of the commissioners.
         (f)  The market monitor immediately shall report in writing
  directly to the commission and commission staff all [any] potential
  market manipulations and all [any] discovered or potential
  violations of commission rules or rules of the independent
  organization.
         (i)  Not later than December 1 of each year, the commission
  shall submit a report to the legislature that describes for the
  12-month period preceding the report's submission:
               (1)  the number of instances in which the market
  monitor reported potential market manipulation to the commission or
  commission staff;
               (2)  the statutes, commission rules, and rules of the
  independent organization alleged to have been violated by the
  reported entities; and
               (3)  the number of instances reported under Subdivision
  (1) for which the commission instituted a formal investigation on
  its own motion or commission staff initiated an enforcement action.
         SECTION 19.  Section 39.155(d), Utilities Code, is amended
  to read as follows:
         (d)  In a qualifying power region, the report [reports]
  required by Subsection (c) [Subsections (b) and (c)] shall be
  submitted by the independent organization or organizations having
  authority over the power region or discrete areas thereof.
         SECTION 20.  Section 39.157(f), Utilities Code, is amended
  to read as follows:
         (f)  Following review of the annual report [reports]
  submitted to it under Section 39.155(c) [Sections 39.155(b) and
  (c)], the commission shall determine whether specific transmission
  or distribution constraints or bottlenecks within this state give
  rise to market power in specific geographic markets in the state.
  The commission, on a finding that specific transmission or
  distribution constraints or bottlenecks within this state give rise
  to market power, may order reasonable mitigation of that potential
  market power by ordering, under Section 39.203(e), one or more
  electric utilities or transmission and distribution utilities to
  construct additional transmission or distribution capacity, or
  both, subject to the certification provisions of this title.
         SECTION 21.  The heading to Section 39.159, Utilities Code,
  as added by Chapter 426 (S.B. 3), Acts of the 87th Legislature,
  Regular Session, 2021, is amended to read as follows:
         Sec. 39.159.  POWER REGION RELIABILITY AND DISPATCHABLE
  GENERATION.
         SECTION 22.  Section 39.159, Utilities Code, as added by
  Chapter 426 (S.B. 3), Acts of the 87th Legislature, Regular
  Session, 2021, is amended by adding Subsections (d) and (e) to read
  as follows:
         (d)  The commission shall require the independent
  organization certified under Section 39.151 for the ERCOT power
  region to develop and implement an ancillary services program to
  procure dispatchable reliability reserve services on a day-ahead
  and real-time basis to account for market uncertainty.  Under the
  required program, the independent organization shall:
               (1)  determine the quantity of services necessary based
  on historical variations in generation availability for each season
  based on a targeted reliability standard or goal, including
  intermittency of non-dispatchable generation facilities and forced
  outage rates, for dispatchable generation facilities;
               (2)  develop criteria for resource participation that
  require a resource to:
                     (A)  be capable of running for at least four hours
  at the resource's high sustained limit;
                     (B)  be online and dispatchable not more than two
  hours after being called on for deployment; and
                     (C)  have the dispatchable flexibility to address
  inter-hour operational challenges; and
               (3)  reduce the amount of reliability unit commitment
  by the amount of dispatchable reliability reserve services procured
  under this section.
         (e)  Notwithstanding Subsection (d)(2)(A), the independent
  organization certified under Section 39.151 for the ERCOT power
  region may require a resource to be capable of running for more than
  four hours as the organization determines is needed.
         SECTION 23.  Subchapter D, Chapter 39, Utilities Code, is
  amended by adding Sections 39.1591, 39.1592, 39.1593, 39.1594, and
  39.1595 to read as follows:
         Sec. 39.1591.  REPORT ON DISPATCHABLE AND NON-DISPATCHABLE
  GENERATION FACILITIES. Not later than December 1 of each year, the
  commission shall file a report with the legislature that:
               (1)  includes:
                     (A)  the estimated annual costs incurred by
  load-serving entities under this subchapter associated with
  backing up dispatchable and non-dispatchable electric generation
  facilities to guarantee that a firm amount of electric energy will
  be available to the ERCOT power grid; and
                     (B)  as calculated by the independent system
  operator, the cumulative annual costs that have been incurred in
  the ERCOT market to facilitate the transmission of dispatchable and
  non-dispatchable electricity to load and to interconnect
  transmission level loads, including a statement of the total
  cumulative annual costs and of the cumulative annual costs incurred
  for each type of activity described by this paragraph; and
               (2)  documents the status of the implementation of this
  subchapter, including whether the rules and protocols adopted to
  implement this subchapter have materially improved the
  reliability, resilience, and transparency of the electricity
  market.
         Sec. 39.1592.  GENERATION RELIABILITY REQUIREMENTS. (a)
  This section applies only to an electric generation facility in the
  ERCOT power region for which a standard generator interconnection
  agreement is signed on or after January 1, 2027, that has been in
  operation for at least one year, and that is not a self-generator.
         (b)  Not later than December 1 of each year, an owner or
  operator of an electric generation facility, other than a battery
  energy storage resource, shall demonstrate to the commission the
  ability of the owner or operator's portfolio to operate or be
  available to operate when called on for dispatch at or above the
  seasonal average generation capability during the times of highest
  reliability risk, as determined by the commission, due to low
  operation reserves, as determined by the commission. The owner or
  operator must be allowed to meet the performance requirements
  described by this subsection by supplementing or contracting with
  on-site or off-site resources, including battery energy storage
  resources. The commission shall determine the average generation
  capability based on expected resource availability and
  seasonal-rated capacity on a standalone basis.
         (c)  The commission shall require the independent
  organization certified under Section 39.151 for the ERCOT power
  region to:
               (1)  enforce the requirements of Subsection (b) by
  imposing financial penalties, as determined by the commission, for
  failing to comply with the performance requirements described by
  that subsection; and 
               (2)  provide financial incentives, as determined by the
  commission, for exceeding the performance requirements described
  by that subsection.
         (d)  The independent organization certified under Section
  39.151 for the ERCOT power region may not impose penalties under
  Subsection (c):
               (1)  for resource unavailability due to planned
  maintenance outages or transmission outages;
               (2)  on resources that are already subject to
  performance obligations during the highest reliability risk hours
  under the day-ahead market rules or other ancillary or reliability
  services established by the commission or the independent
  organization; or
               (3)  during hours outside a baseline established by the
  commission that includes morning and evening ramping periods.
         Sec. 39.1593.  COST ALLOCATION OF RELIABILITY SERVICES. (a)
  The commission shall direct the independent organization certified
  under Section 39.151 for the ERCOT power region to evaluate with
  input from a technical advisory committee established under the
  bylaws of the independent organization that includes market
  participants whether allocating the costs of ancillary and
  reliability services, including those procured under Section
  39.159, as added by Chapter 426 (S.B. 3), Acts of the 87th
  Legislature, Regular Session, 2021, using a methodology described
  by Subsection (b) would result in a net savings to consumers in the
  ERCOT power region compared to allocating all costs of ancillary
  and reliability services to load to ensure reliability.
         (b)  The commission shall evaluate whether to allocate the
  cost of ancillary and reliability services:
               (1)  on a semiannual basis among electric generation
  facilities and load-serving entities in proportion to their
  contribution to unreliability during the times of highest
  reliability risk due to low operating reserves by season, as
  determined by the commission based on a number of hours adopted by
  the commission for that season; or
               (2)  using another method identified by the commission.
         (c)  The evaluation must:
               (1)  use historical ancillary and reliability services
  data;
               (2)  consider the causes for ancillary services
  deployments; and
               (3)  consider the design, procurement, and cost
  allocation of ancillary services required by Section 35.004(h).
         (d)  Not later than December 1, 2026, the commission shall
  submit a report on the evaluation to the legislature.
         Sec. 39.1594.  RELIABILITY PROGRAM. (a)  Under Section
  39.159(b), as added by Chapter 426 (S.B. 3), Acts of the 87th
  Legislature, Regular Session, 2021, or other law, the commission
  may not require retail customers or load-serving entities in the
  ERCOT power region to purchase credits designed to support a
  required reserve margin or other capacity or reliability
  requirement unless the commission ensures that:
               (1)  the net cost to the ERCOT market of the credits
  does not exceed $1 billion annually, less the cost of any interim or
  bridge solutions that are lawfully implemented, except that the
  commission may adjust the limit:
                     (A)  proportionally according to the highest net
  peak demand year-over-year with a base year of 2026; and
                     (B)  for inflation with a base year of 2026;
               (2)  credits are available only for dispatchable
  generation;
               (3)  the independent organization certified under
  Section 39.151 for the ERCOT power region is required to procure the
  credits centrally in a manner designed to prevent market
  manipulation by affiliated generation and retail companies;
               (4)  a generator cannot receive credits that exceed the
  amount of generation bid into the forward market by that generator;
               (5)  an electric generating unit can receive a credit
  only for being available to perform in real time during the tightest
  intervals of low supply and high demand on the grid, as defined by
  the commission on a seasonal basis;
               (6)  a penalty structure is established, resulting in a
  net benefit to load, for generators that bid into the forward market
  but do not meet the full obligation;
               (7)  any program reliability standard reasonably
  balances the incremental reliability benefits to customers against
  the incremental costs of the program based on an evaluation by the
  wholesale electric market monitor;
               (8)  a single ERCOT-wide clearing price is established
  for the program and does not differentiate payments or credit
  values based on locational constraints;
               (9)  any market changes implemented as a bridge
  solution for the program are removed not later than the first
  anniversary of the date the program was implemented;
               (10)  the independent organization certified under
  Section 39.151 for the ERCOT power region begins implementing real
  time co-optimization of energy and ancillary services in the ERCOT
  wholesale market before the program is implemented;
               (11)  all elements of the program are initially
  implemented on a single starting date;
               (12)  the terms of the program and any associated
  market rules do not assign costs, credit, or collateral for the
  program in a manner that provides a cost advantage to load-serving
  entities who own, or whose affiliates own, generation facilities;
               (13)  secured financial credit and collateral
  requirements are adopted for the program to ensure that other
  market participants do not bear the risk of nonperformance or
  nonpayment; and
               (14)  the wholesale electric market monitor has the
  authority and necessary resources to investigate potential
  instances of market manipulation by program participants,
  including financial and physical actions, and recommend penalties
  to the commission.
         (b)  This section does not require the commission to adopt a
  reliability program that requires an entity to purchase capacity
  credits.
         (c)  The commission and the independent organization
  certified under Section 39.151 for the ERCOT power region shall
  consider comments and recommendations from a technical advisory
  committee established under the bylaws of the independent
  organization that includes market participants when adopting and
  implementing a program described by Subsection (a), if any.
         (d)  Before the commission adopts a program described by
  Subsection (a), the commission shall require the independent
  organization certified under Section 39.151 for the ERCOT power
  region and the wholesale electric market monitor to complete an
  updated assessment on the cost to and effects on the ERCOT market of
  the proposed reliability program and submit to the commission and
  the legislature a report on the costs and benefits of continuing the
  program.  The assessment must include:
               (1)  an evaluation of the cost of new entry and the
  effects of the proposed reliability program on consumer costs and
  the competitive retail market;
               (2)  a compilation of detailed information regarding
  cost offsets realized through a reduction in costs in the energy and
  ancillary services markets and use of reliability unit commitments;
               (3)  a set of metrics to measure the effects of the
  proposed reliability program on system reliability;
               (4)  an evaluation of the cost to retain existing
  dispatchable resources in the ERCOT power region;
               (5)  an evaluation of the planned timeline for
  implementation of real time co-optimization for energy and
  ancillary services in the ERCOT power region; and
               (6)  anticipated market and reliability effects of new
  and updated ancillary service products.
         (e)  If the commission adopts a program described by
  Subsection (a), the commission by rule shall prohibit a generator
  that receives credits through the program for a dispatchable
  electric generating unit operated by the generator from
  decommissioning or removing from service that unit while the
  generator participates in the program unless the decommissioning or
  removal from service begins after September 1, 2028, or the
  commission finds that the decommissioning or removal from service:
               (1)  is required by or is a result of federal law; or
               (2)  would alleviate significant financial hardship
  for the generator.
         (f)  If the commission adopts a program described by
  Subsection (a), the wholesale electric market monitor described by
  Section 39.1515 biennially shall:
               (1)  evaluate the incremental reliability benefits of
  the program for consumers compared to the costs to consumers of the
  program and the costs in the energy and ancillary services markets;
  and
               (2)  report the results of each evaluation to the
  legislature.
         Sec. 39.1595.  GRID RELIABILITY LEGISLATIVE OVERSIGHT
  COMMITTEE.  (a)  In this section, "committee" means the Grid
  Reliability Legislative Oversight Committee established under this
  section.
         (b)  The Grid Reliability Legislative Oversight Committee is
  created to oversee the commission's implementation of legislation
  related to the regulation of the electricity market in this state
  enacted by the 87th and 88th Legislatures.
         (c)  The committee is composed of eight members as follows:
               (1)  three members of the senate, appointed by the
  lieutenant governor;
               (2)  three members of the house of representatives,
  appointed by the speaker of the house of representatives;
               (3)  the chair of the committee of the senate having
  primary jurisdiction over matters relating to the generation of
  electricity; and
               (4)  the chair of the committee of the house having
  primary jurisdiction over matters relating to the generation of
  electricity.
         (d)  An appointed member of the committee serves at the
  pleasure of the appointing official.
         (e)  The committee members described by Subsections (c)(3)
  and (4) serve as presiding co-chairs.
         (f)  A member of the committee may not receive compensation
  for serving on the committee but is entitled to reimbursement for
  travel expenses incurred by the member while conducting the
  business of the committee as provided by the General Appropriations
  Act.
         (g)  The committee shall meet at least twice each year at the
  call of either co-chair and shall meet at other times at the call of
  either co-chair, as that officer determines appropriate.
         (h)  Chapter 551, Government Code, applies to the committee.
         SECTION 24.  (a) This section takes effect only if the Act
  of the 88th Legislature, Regular Session, 2023, relating to
  nonsubstantive additions to and corrections in enacted codes
  becomes law.
         (b)  Subchapter D, Chapter 39, Utilities Code, is amended by
  adding Sections 39.166, 39.167, and 39.168 to read as follows:
         Sec. 39.166.  ELECTRIC INDUSTRY REPORT. (a) Not later than
  January 15 of each odd-numbered year, the commission, in
  consultation with the independent organization certified under
  Section 39.151 for the ERCOT power region, shall prepare and submit
  to the legislature an electric industry report.
         (b)  Each electric industry report submitted under this
  section must:
               (1)  identify existing and potential transmission and
  distribution constraints and system needs within the ERCOT power
  region, alternatives for meeting system needs, and recommendations
  for meeting system needs;
               (2)  summarize key findings from:
                     (A)  the grid reliability assessment conducted
  under Section 39.165; and
                     (B)  the report required by Section 39.9112;
               (3)  outline basic information regarding the electric
  grid and market in this state, including generation capacity,
  customer demand, and transmission capacity currently installed on
  the grid and projected in the future; and
               (4)  be presented in plain language that is readily
  understandable by a person with limited knowledge of the electric
  industry.
         Sec. 39.167.  CONFLICTS OF INTEREST REPORT. The commission
  and the independent organization certified under Section 39.151 for
  the ERCOT power region annually shall review statutes, rules,
  protocols, and bylaws that apply to conflicts of interest for
  commissioners and for members of the governing body of the
  independent organization and submit to the legislature a report on
  the effects the statutes, rules, protocols, and bylaws have on the
  ability of the commission and the independent organization to
  fulfill their duties.
         Sec. 39.168.  RETAIL SALES REPORT.  (a)  Each retail electric
  provider that offers electricity for sale shall report to the
  commission:
               (1)  its annual retail sales in this state;
               (2)  the annual retail sales of its affiliates by
  number of customers, kilowatts per hour sold, and revenue from
  kilowatts per hour sold by customer class; and
               (3)  any other information the commission requires
  relating to affiliations between retail electric providers.
         (b)  The commission by rule shall prescribe the nature and
  detail of the reporting requirements. The commission may accept
  information reported under other law to satisfy the requirements of
  this section. Information reported under this section is
  confidential and not subject to disclosure if the information is
  competitively sensitive information. The commission shall
  administer the reporting requirements in a manner that ensures the
  confidentiality of competitively sensitive information.
         SECTION 25.  (a) This section takes effect only if the Act of
  the 88th Legislature, Regular Session, 2023, relating to
  nonsubstantive additions to and corrections in enacted codes does
  not become law.
         (b)  Subchapter D, Chapter 39, Utilities Code, is amended by
  adding Sections 39.166, 39.167, and 39.168 to read as follows:
         Sec. 39.166.  ELECTRIC INDUSTRY REPORT. (a) Not later than
  January 15 of each odd-numbered year, the commission, in
  consultation with the independent organization certified under
  Section 39.151 for the ERCOT power region, shall prepare and submit
  to the legislature an electric industry report.
         (b)  Each electric industry report submitted under this
  section must:
               (1)  identify existing and potential transmission and
  distribution constraints and system needs within the ERCOT power
  region, alternatives for meeting system needs, and recommendations
  for meeting system needs;
               (2)  summarize key findings from:
                     (A)  the grid reliability assessment conducted
  under Section 39.159, as added by Chapter 876 (S.B. 1281), Acts of
  the 87th Legislature, Regular Session, 2021; and
                     (B)  the report required by Section 39.9112;
               (3)  outline basic information regarding the electric
  grid and market in this state, including generation capacity,
  customer demand, and transmission capacity currently installed on
  the grid and projected in the future; and
               (4)  be presented in plain language that is readily
  understandable by a person with limited knowledge of the electric
  industry.
         Sec. 39.167.  CONFLICTS OF INTEREST REPORT. The commission
  and the independent organization certified under Section 39.151 for
  the ERCOT power region annually shall review statutes, rules,
  protocols, and bylaws that apply to conflicts of interest for
  commissioners and for members of the governing body of the
  independent organization and submit to the legislature a report on
  the effects the statutes, rules, protocols, and bylaws have on the
  ability of the commission and the independent organization to
  fulfill their duties.
         Sec. 39.168.  RETAIL SALES REPORT.  (a)  Each retail electric
  provider that offers electricity for sale shall report to the
  commission:
               (1)  its annual retail sales in this state;
               (2)  the annual retail sales of its affiliates by
  number of customers, kilowatts per hour sold, and revenue from
  kilowatts per hour sold by customer class; and
               (3)  any other information the commission requires
  relating to affiliations between retail electric providers.
         (b)  The commission by rule shall prescribe the nature and
  detail of the reporting requirements. The commission may accept
  information reported under other law to satisfy the requirements of
  this section. Information reported under this section is
  confidential and not subject to disclosure if the information is
  competitively sensitive information. The commission shall
  administer the reporting requirements in a manner that ensures the
  confidentiality of competitively sensitive information.
         SECTION 26.  Sections 39.203(e) and (i), Utilities Code, are
  amended to read as follows:
         (e)  The commission may require an electric utility or a
  transmission and distribution utility to construct or enlarge
  facilities to ensure safe and reliable service for the state's
  electric markets and to reduce transmission constraints within
  ERCOT in a cost-effective manner where the constraints are such
  that they are not being resolved through Chapter 37 or the ERCOT
  transmission planning process. [The commission shall require an
  electric utility or a transmission and distribution utility to
  construct or enlarge transmission or transmission-related
  facilities for the purpose of meeting the goal for generating
  capacity from renewable energy technologies under Section
  39.904(a).] In any proceeding brought under Chapter 37, an
  electric utility or transmission and distribution utility ordered
  to construct or enlarge facilities under this subchapter need not
  prove that the construction ordered is necessary for the service,
  accommodation, convenience, or safety of the public and need not
  address the factors listed in Sections 37.056(c)(1)-(3) and (4)(E).
  Notwithstanding any other law, including Section 37.057, in any
  proceeding brought under Chapter 37 by an electric utility or a
  transmission and distribution utility related to an application for
  a certificate of public convenience and necessity to construct or
  enlarge transmission or transmission-related facilities under this
  subsection, the commission shall issue a final order before the
  181st day after the date the application is filed with the
  commission. If the commission does not issue a final order before
  that date, the application is approved.
         (i)  The commission, in cooperation with transmission and
  distribution utilities and the ERCOT independent system operator,
  shall study whether existing transmission and distribution
  planning processes are sufficient to provide adequate
  infrastructure for seawater desalination projects. If the
  commission determines that statutory changes are needed to ensure
  that adequate infrastructure is developed for projects of that
  kind, the commission shall include recommendations in the report
  required by Section 12.203 [31.003].
         SECTION 27.  Section 39.206(q), Utilities Code, is amended
  to read as follows:
         (q)  The commission shall, in conjunction with the Nuclear
  Regulatory Commission, investigate the development of a mechanism
  whereby the State of Texas could ensure that funds for
  decommissioning will be obtained when necessary in the same manner
  as if the State of Texas were the licensee under federal law. [The
  commission shall file legislative recommendations regarding any
  changes in law that may be necessary to carry out the purposes of
  this subsection prior to January 15, 2009, which may be combined
  with the report required by Section 31.003.]
         SECTION 28.  Section 39.402(a), Utilities Code, is amended
  to read as follows:
         (a)  Until the date on which an electric utility subject to
  this subchapter is authorized by the commission to implement
  customer choice, the rates of the utility shall be regulated under
  traditional cost of service regulation and the utility is subject
  to all applicable regulatory authority prescribed by this subtitle
  and Subtitle A, including Chapters 14, 32, 33, 36, and 37. Until the
  date on which an electric utility subject to this subchapter
  implements customer choice, the provisions of this chapter, other
  than this subchapter, Sections 39.1516[, 39.904,] and 39.905, and
  the provisions relating to the duty to obtain a permit from the
  Texas Commission on Environmental Quality for an electric
  generating facility and to reduce emissions from an electric
  generating facility, shall not apply to that utility. That portion
  of any commission order entered before September 1, 2001, to comply
  with this subchapter shall be null and void.
         SECTION 29.  Section 39.408(g), Utilities Code, is amended
  to read as follows:
         (g)  This section expires September 1, 2029 [2023].
         SECTION 30.  Section 39.452(d), Utilities Code, is amended
  to read as follows:
         (d)  Until the date on which an electric utility subject to
  this subchapter implements customer choice:
               (1)  the provisions of this chapter do not apply to that
  electric utility, other than this subchapter, Sections 39.1516[,
  39.904,] and 39.905, the provisions relating to the duty to obtain a
  permit from the Texas Commission on Environmental Quality for an
  electric generating facility and to reduce emissions from an
  electric generating facility, and the provisions of Subchapter G
  that pertain to the recovery and securitization of hurricane
  reconstruction costs authorized by Sections 39.458-39.463; and
               (2)  the electric utility is not subject to a rate
  freeze and, subject to the limitation provided by Subsection (b),
  may file for rate changes under Chapter 36 and for approval of one
  or more of the rate rider mechanisms authorized by Sections 39.454
  and 39.455.
         SECTION 31.  Section 39.4525(g), Utilities Code, is amended
  to read as follows:
         (g)  This section expires September 1, 2029 [2023].
         SECTION 32.  Section 39.502(b), Utilities Code, is amended
  to read as follows:
         (b)  Until the date on which an electric utility subject to
  this subchapter implements customer choice, the provisions of this
  chapter, other than this subchapter and Sections 39.1516[, 39.904,]
  and 39.905, do not apply to that utility.
         SECTION 33.  Section 39.504(g), Utilities Code, is amended
  to read as follows:
         (g)  This section expires September 1, 2029 [2023].
         SECTION 34.  Section 39.552(b), Utilities Code, is amended
  to read as follows:
         (b)  Until the date on which an electric utility subject to
  this subchapter implements customer choice, the provisions of this
  chapter, other than this subchapter and Sections 39.1516[, 39.904,]
  and 39.905, do not apply to that utility.
         SECTION 35.  Section 39.9055, Utilities Code, is amended to
  read as follows:
         Sec. 39.9055.  EXAMINATION OF DEMAND RESPONSE POTENTIAL OF
  SEAWATER DESALINATION PROJECTS. The commission and the ERCOT
  independent system operator shall study the potential for seawater
  desalination projects to participate in existing demand response
  opportunities in the ERCOT market. To the extent feasible, the
  study shall determine whether the operational characteristics of
  seawater desalination projects enable projects of that kind to
  participate in ERCOT-operated ancillary services markets or other
  competitively supplied demand response opportunities. The study
  shall also determine the potential economic benefit to a seawater
  desalination project if the project is able to reduce its demand
  during peak pricing periods. The commission shall include the
  results of the study in the report required by Section 12.203
  [31.003].
         SECTION 36.  Section 39.908, Utilities Code, is amended to
  read as follows:
         Sec. 39.908.  EFFECT OF SUNSET PROVISION. [(a)] If the
  commission is abolished under Section 12.005 or other law, the [and
  the other provisions of this title expire as provided by Chapter
  325, Government Code (Texas Sunset Act), this subchapter, including
  the provisions of this title referred to in this subchapter,
  continues in full force and effect and does not expire.
         [(b)  The] authorities, duties, and functions of the
  commission under this chapter shall be performed and carried out by
  a successor agency to be designated by the legislature before
  abolishment of the commission or, if the legislature does not
  designate the successor, by the secretary of state.
         SECTION 37.  Subchapter Z, Chapter 39, Utilities Code, is
  amended by adding Sections 39.9111, 39.9112, and 39.9113 to read as
  follows:
         Sec. 39.9111.  RULES RELATED TO RENEWABLE POWER FACILITIES.
  The commission may adopt rules requiring renewable power facilities
  to have reactive power control capabilities or any other feasible
  technology designed to reduce the facilities' effects on system
  reliability.
         Sec. 39.9112.  REPORT ON TRANSMISSION AND GENERATION
  CAPACITY. The commission and the independent organization
  certified under Section 39.151 for the ERCOT power region shall
  study the need for increased transmission and generation capacity
  throughout this state and report to the legislature the results of
  the study and any recommendations for legislation. The report must
  be filed with the legislature not later than December 31 of each
  even-numbered year.
         Sec. 39.9113.  RENEWABLE ENERGY CREDITS. To facilitate
  voluntary contractual obligations and verify claims regarding
  environmental attributes of renewable energy production in this
  state, the independent organization certified under Section 39.151
  for the ERCOT power region shall maintain an accreditation and
  banking system to award and track voluntary renewable energy
  credits generated by eligible facilities.
         SECTION 38.  Section 39.916(a), Utilities Code, is amended
  by amending Subdivision (1) and adding Subdivision (4) to read as
  follows:
               (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.
               (4)  "Renewable energy technology" means any
  technology that relies exclusively on an energy source that is
  naturally regenerated over a short time and is derived from the sun
  directly or indirectly or from moving water or other natural
  movements or mechanisms of the environment. The term includes a
  technology that relies on energy derived from the sun directly, on
  wind, geothermal, hydroelectric, wave, or tidal energy, or on
  biomass or biomass-based waste products, including landfill gas.
  The term does not include a technology that relies on an energy
  resource derived from a fossil fuel, a waste product from a fossil
  fuel, or a waste product from an inorganic source.
         SECTION 39.  The heading to Section 39.918, Utilities Code,
  is amended to read as follows:
         Sec. 39.918.  UTILITY FACILITIES FOR POWER RESTORATION AFTER
  SIGNIFICANT [WIDESPREAD] POWER OUTAGE.  
         SECTION 40.  Section 39.918, Utilities Code, is amended by
  amending Subsections (a) and (b) and adding Subsection (a-1) to
  read as follows:
         (a)  In this section, "significant ["widespread] power
  outage" means an event that [results in]:
               (1)  results in a loss of electric power that:
                     (A)  affects a significant number of distribution
  customers of a transmission and distribution utility[;] and
                     [(B)]  has lasted or is expected to last for at
  least six [eight] hours;
                     (B)  affects distribution customers of a
  transmission and distribution utility in an area for which the
  governor has issued a disaster or emergency declaration;
                     (C)  affects distribution customers served by a
  radial transmission or distribution facility, creates a risk to
  public health or safety, and has lasted or is expected to last for
  at least 12 hours; or
                     (D)  creates [and
               [(2)] a risk to public health or safety because it
  affects a critical infrastructure facility that serves the public
  such as a hospital, health care facility, law enforcement facility,
  fire station, or water or wastewater facility; or
               (2)  causes the independent system operator to order a
  transmission and distribution utility to shed load.
         (a-1)  The Texas Division of Emergency Management, the
  independent organization certified under Section 39.151 for the
  ERCOT power region, or the executive director of the commission may
  determine that a power outage other than an outage described by
  Subsection (a) is a significant power outage for the purposes of
  this section.
         (b)  Notwithstanding any other provision of this subtitle, a
  transmission and distribution utility may:
               (1)  lease and operate facilities that provide
  temporary emergency electric energy to aid in restoring power to
  the utility's distribution customers during a significant
  [widespread] power outage in which:
                     (A)  the independent system operator has ordered
  the utility to shed load; or
                     (B)  the utility's distribution facilities are
  not being fully served by the bulk power system under normal
  operations; and
               (2)  procure, own, and operate, or enter into a
  cooperative agreement with other transmission and distribution
  utilities to procure, own, and operate jointly, transmission and
  distribution facilities that have a lead time of at least six months
  and would aid in restoring power to the utility's distribution
  customers following a significant [widespread] power outage.  In
  this section, long lead time facilities may not be electric energy
  storage equipment or facilities under Chapter 35, Utilities Code.
         SECTION 41.  Section 40.001(a), Utilities Code, is amended
  to read as follows:
         (a)  Notwithstanding any other provision of law, except
  Sections 39.155, 39.157(e), and 39.203, [and 39.904,] this chapter
  governs the transition to and the establishment of a fully
  competitive electric power industry for municipally owned
  utilities. With respect to the regulation of municipally owned
  utilities, this chapter controls over any other provision of this
  title, except for sections in which the term "municipally owned
  utility" is specifically used.
         SECTION 42.  Section 40.004, Utilities Code, is amended to
  read as follows:
         Sec. 40.004.  JURISDICTION OF COMMISSION. Except as
  specifically otherwise provided in this chapter, the commission has
  jurisdiction over municipally owned utilities only for the
  following purposes:
               (1)  to regulate wholesale transmission rates and
  service, including terms of access, to the extent provided by
  Subchapter A, Chapter 35;
               (2)  to regulate certification of retail service areas
  to the extent provided by Chapter 37;
               (3)  to regulate rates on appeal under Subchapters D
  and E, Chapter 33, subject to Section 40.051(c);
               (4)  to establish a code of conduct as provided by
  Section 39.157(e) applicable to anticompetitive activities and to
  affiliate activities limited to structurally unbundled affiliates
  of municipally owned utilities, subject to Section 40.054;
               (5)  to establish terms and conditions for open access
  to transmission and distribution facilities for municipally owned
  utilities providing customer choice, as provided by Section 39.203;
               (6)  to administer [the renewable energy credits
  program under Section 39.904(b) and] the natural gas energy credits
  program under Section 39.9044(b);
               (7)  to require reports of municipally owned utility
  operations only to the extent necessary to:
                     (A)  enable the commission to determine the
  aggregate load and energy requirements of the state and the
  resources available to serve that load; or
                     (B)  enable the commission to determine
  information relating to market power as provided by Section 39.155;
  and
               (8)  to evaluate and monitor the cybersecurity
  preparedness of a municipally owned utility described by Section
  39.1516(a)(3) or (4).
         SECTION 43.  Section 41.001, Utilities Code, is amended to
  read as follows:
         Sec. 41.001.  APPLICABLE LAW. Notwithstanding any other
  provision of law, except Sections 39.155, 39.157(e), and 39.203,
  [and 39.904,] this chapter governs the transition to and the
  establishment of a fully competitive electric power industry for
  electric cooperatives. Regarding the regulation of electric
  cooperatives, this chapter shall control over any other provision
  of this title, except for sections in which the term "electric
  cooperative" is specifically used.
         SECTION 44.  Section 52.060, Utilities Code, is amended to
  read as follows:
         Sec. 52.060.  ADMINISTRATIVE FEE OR ASSESSMENT. The
  commission may prescribe and collect a fee or assessment from local
  exchange companies necessary to recover the cost to the commission
  and to the office of activities carried out and services provided
  under this subchapter and Section 12.203 [52.006].
         SECTION 45.  Section 13.4132, Water Code, is amended by
  adding Subsection (b-1) to read as follows:
         (b-1)  Notwithstanding Section 5.505, the term of an
  emergency order issued under this section by the utility commission
  or the commission may not exceed 360 days. The emergency order may
  be renewed:
               (1)  once for a period not to exceed 360 days; or
               (2)  if the utility is undergoing a sale, transfer,
  merger, consolidation, or acquisition required to be reported to
  the utility commission under Section 13.301, for a reasonable time
  until the sale, transfer, merger, consolidation, or acquisition is
  complete.
         SECTION 46.  (a) The following provisions are repealed:
               (1)  Section 304.201, Business & Commerce Code;
               (2)  Section 31.003, Utilities Code;
               (3)  Section 39.155(b), Utilities Code;
               (4)  Section 39.904, Utilities Code;
               (5)  Section 39.916(g), Utilities Code;
               (6)  Section 39.918(k), Utilities Code; and
               (7)  Section 52.006, Utilities Code.
         (b)  Section 34, Chapter 426 (S.B. 3), Acts of the 87th
  Legislature, Regular Session, 2021, is repealed.
         SECTION 47.  The Public Utility Commission of Texas is not
  required to conduct the first review of an allowance under Section
  35.004(d-3), Utilities Code, as added by this Act, until the fifth
  year after the adoption of the rules required by Section
  35.004(d-1), Utilities Code, as added by this Act.
         SECTION 48.  The Public Utility Commission of Texas shall
  adopt rules as necessary to implement the changes in law made by
  this Act to Section 35.004, Utilities Code, not later than the 180th
  day after the effective date of this Act.
         SECTION 49.  The changes in law made by this Act to Section
  35.004, Utilities Code, apply only to an electric generation
  facility that executes a standard generator interconnection
  agreement with a transmission-owning utility after December 31,
  2025.
         SECTION 50.  (a)  The presiding officer of the Public Utility
  Commission of Texas shall designate a commissioner to serve a term
  on the governing body of the independent organization certified
  under Section 39.151, Utilities Code, for the ERCOT power region
  that begins January 1, 2024, to comply with Section 39.151(g-1),
  Utilities Code, as amended by this Act.
         (b)   Except as provided by Subsection (c) of this section,
  Section 12.059, Utilities Code, as amended by this Act, applies to a
  member of the Public Utility Commission of Texas appointed before,
  on, or after the effective date of this Act.
         (c)  A member of the Public Utility Commission of Texas who,
  before the effective date of this Act, completed the training
  program required by Section 12.059, Utilities Code, as that law
  existed before the effective date of this Act, is only required to
  complete additional training on the subjects added by this Act to
  the training program required by Section 12.059, Utilities Code.  A
  commission member described by this subsection may not vote,
  deliberate, or be counted as a member in attendance at a meeting of
  the commission held on or after December 1, 2023, until the member
  completes the additional training.
         SECTION 51.  The Public Utility Commission of Texas shall
  require the independent organization certified under Section
  39.151, Utilities Code, for the ERCOT power region to implement the
  program required by Section 39.159(d), Utilities Code, as added by
  this Act, not later than December 1, 2024.
         SECTION 52.  (a) The Public Utility Commission of Texas
  shall prepare the portions of the report required by Section
  39.1591(2), Utilities Code, as added by this Act, only for reports
  due on or after December 1, 2024.
         (b)  The Public Utility Commission of Texas shall implement
  Section 39.1592, Utilities Code, as added by this Act, not later
  than December 1, 2027.
         (c)  Notwithstanding Subsection (b) of this section and the
  deadline provided by Section 39.1592(b), Utilities Code, as added
  by this Act, an owner or operator of an electric generation facility
  to which Section 39.1592(b), Utilities Code, as added by this Act,
  applies shall make the first demonstration required by that
  subsection not later than January 1, 2028.
         (d)  The Public Utility Commission of Texas and the
  independent organization certified under Section 39.151, Utilities
  Code, for the ERCOT power region shall:
               (1)  conduct a study on whether implementing an
  alternative to the single market clearing price for energy,
  ancillary services, and other products would reduce costs to
  residential and small commercial customers or their load-serving
  entities, such as paying generators the price bid and not the
  additional amounts up to the highest cost generator needed to clear
  the market;
               (2)  analyze:
                     (A)  whether cost savings can be achieved for
  consumers, or load-serving entities serving residential and small
  commercial consumers, by:
                           (i)  limiting generators that have received
  state or federal subsidies to receiving the price bid by that type
  of generator; or
                           (ii)  limiting a generator to receiving the
  price bid by that generator; and
                     (B)  if a pay as bid mechanism is used or a single
  market clearing price mechanism is retained, whether
  non-dispatchable and dispatchable generation facilities should bid
  into separate markets for ERCOT power region products such that the
  generation facilities are directly competing against technologies
  with similar attributes; and
               (3)  report the results of the study and analysis
  conducted under this subsection to the legislature not later than
  December 1, 2025.
         SECTION 53.  (a) Except as provided by Subsection (b) of
  this section, notwithstanding the repeal by this Act of Section
  39.904, Utilities Code, the Public Utility Commission of Texas by
  rule shall adopt a program to apply that section as it existed
  immediately before the effective date of this Act, and to apply
  other statutes that referred to that section immediately before the
  effective date of this Act, as if that section had not been repealed
  by this Act and the other statutes that referred to that section had
  not been repealed or amended by this Act.
         (b)  Under Subsection (a) of this section, the statutes
  described in that subsection must be applied as if Section 39.904
  were applicable only to renewable energy technologies that
  exclusively rely on an energy source that is naturally regenerated
  over a short time and derived directly from the sun.
         (c)  This section expires September 1, 2025, and the Public
  Utility Commission of Texas shall phase out the program required by
  Subsection (a) of this section so that it terminates on that date.
         SECTION 54.  The changes in law made by this Act to Section
  15.023, Utilities Code, apply only to a violation committed on or
  after the effective date of this Act. A violation committed before
  the effective date of this Act is governed by the law in effect when
  the violation was committed, and the former law is continued in
  effect for that purpose.
         SECTION 55.  It is the intent of the 88th Legislature,
  Regular Session, 2023, that the amendments made by this Act be
  harmonized with another Act of the 88th Legislature, Regular
  Session, 2023, relating to nonsubstantive additions to and
  corrections in enacted codes.
         SECTION 56.  This Act takes effect September 1, 2023.
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
 
         I certify that H.B. No. 1500 was passed by the House on April
  19, 2023, by the following vote:  Yeas 140, Nays 1, 1 present, not
  voting; that the House refused to concur in Senate amendments to
  H.B. No. 1500 on May 25, 2023, 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. 1500 on May 28, 2023, by the following vote:  Yeas 140,
  Nays 1, 2 present, not voting.
 
  ______________________________
  Chief Clerk of the House   
 
         I certify that H.B. No. 1500 was passed by the Senate, with
  amendments, on May 24, 2023, by the following vote:  Yeas 30, 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.
  1500 on May 28, 2023, by the following vote:  Yeas 31, Nays 0.
 
  ______________________________
  Secretary of the Senate   
  APPROVED: __________________
                  Date       
   
           __________________
                Governor