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  S.B. No. 365
 
 
 
 
AN ACT
  relating to distributed generation of electric power.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 31.002, Utilities Code, is amended by
  adding Subdivision (4-a) and amending Subdivision (10) to read as
  follows:
               (4-a)  "Distributed natural gas generation facility"
  means a facility installed on the customer's side of the meter that
  uses natural gas to generate not more than 2,000 kilowatts of
  electricity.
               (10)  "Power generation company" means a person,
  including a person who owns or operates a distributed natural gas
  generation facility, that:
                     (A)  generates electricity that is intended to be
  sold at wholesale;
                     (B)  does not own a transmission or distribution
  facility in this state other than an essential interconnecting
  facility, a facility not dedicated to public use, or a facility
  otherwise excluded from the definition of "electric utility" under
  this section; and
                     (C)  does not have a certificated service area,
  although its affiliated electric utility or transmission and
  distribution utility may have a certificated service area.
         SECTION 2.  The heading to Subchapter B, Chapter 35,
  Utilities Code, is amended to read as follows:
  SUBCHAPTER B.  EXEMPT WHOLESALE GENERATORS, DISTRIBUTED NATURAL GAS
  GENERATION FACILITIES, AND POWER MARKETERS
         SECTION 3.  Subchapter B, Chapter 35, Utilities Code, is
  amended by adding Section 35.036 to read as follows:
         Sec. 35.036.  DISTRIBUTED NATURAL GAS GENERATION
  FACILITIES. (a)  A person who owns or operates a distributed
  natural gas generation facility may sell electric power generated
  by the facility. The electric utility, electric cooperative, or
  retail electric provider that provides retail electricity service
  to the facility may purchase electric power tendered to it by the
  owner or operator of the facility at a value agreed to by the
  electric utility, electric cooperative, or retail electric
  provider and the owner or operator of the facility.  The value of
  the electric power may be based wholly or partly on the clearing
  price of energy at the time of day and at the location at which the
  electric power is made available to the electric grid.
         (b)  At the request of the owner or operator of the
  distributed natural gas generation facility, the electric utility
  or electric cooperative shall allow the owner or operator of the
  facility to use transmission and distribution facilities to
  transmit the electric power to another entity that is acceptable to
  the owner or operator in accordance with commission rules or a
  tariff approved by the Federal Energy Regulatory Commission.
         (c)  Subject to Subsections (e) and (f), if the owner or
  operator of a distributed natural gas generation facility requests
  to be interconnected to an electric utility or electric cooperative
  that does not have a transmission tariff approved by the Federal
  Energy Regulatory Commission, the electric utility or electric
  cooperative may recover from the owner or operator of the facility
  the reasonable costs of interconnecting the facility with the
  electric utility or electric cooperative that are necessary for and
  directly attributable to the interconnection of the facility.
         (d)  Subject to Subsections (e) and (f), an electric utility
  or electric cooperative may recover from the owner or operator of a
  distributed natural gas generation facility the reasonable costs of
  electric facility upgrades and improvements if:
               (1)  the rated capacity of the distributed natural gas
  generation facility is greater than the rated capacity of the
  electric utility or electric cooperative; and
               (2)  the costs are necessary for and directly
  attributable to accommodating the distributed natural gas
  generation facility's capacity.
         (e)  An electric utility or electric cooperative may recover
  costs under Subsection (c) or (d) only if:
               (1)  the electric utility or electric cooperative
  provides a written good faith cost estimate to the owner or operator
  of the distributed natural gas generation facility; and
               (2)  the owner or operator of the distributed natural
  gas generation facility agrees in writing to pay the reasonable and
  necessary costs of interconnection or capacity accommodation
  requested by the owner or operator and described in the estimate
  before the electric utility or electric cooperative incurs the
  costs.
         (f)  If an electric utility or electric cooperative seeks to
  recover from the owner or operator of a distributed natural gas
  generation facility an amount that exceeds the amount in the
  estimate provided under Subsection (e) by more than five percent,
  the commission shall resolve the dispute at the request of the owner
  or operator of the facility.
         (g)  A distributed natural gas generation facility must
  comply with emissions limitations established by the Texas
  Commission on Environmental Quality for a standard emissions permit
  for an electric generation facility unit installed after January 1,
  1995.
         (h)  This section does not require an electric cooperative to
  transmit electricity to a retail point of delivery in the
  certificated service area of the electric cooperative if the
  electric cooperative has not adopted customer choice.
         SECTION 4.  Subsection (c), Section 39.351, Utilities Code,
  is amended to read as follows:
         (c)  The commission may establish simplified filing
  requirements for distributed natural gas generation facilities [A
  power generation company may register any time after September 1,
  2000].
         SECTION 5.  This Act takes effect September 1, 2011.
 
 
 
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
         I hereby certify that S.B. No. 365 passed the Senate on
  April 28, 2011, by the following vote:  Yeas 31, Nays 0.
 
 
  ______________________________
  Secretary of the Senate    
 
         I hereby certify that S.B. No. 365 passed the House on
  May 25, 2011, by the following vote:  Yeas 147, Nays 0, one
  present not voting.
 
 
  ______________________________
  Chief Clerk of the House   
 
 
 
  Approved:
 
  ______________________________ 
              Date
 
 
  ______________________________ 
            Governor