S.B. No. 398

	AN ACT
	relating to certain resources and facilities for distributed
	generation.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Subtitle C, Title 5, Business & Commerce Code, is
	amended by adding Chapter 113 to read as follows:
	CHAPTER 113. SALES AND LEASING OF DISTRIBUTED RENEWABLE GENERATION
	RESOURCES
	Sec. 113.001.  DEFINITIONS. In this chapter:
	(1)  "Distributed renewable generation" has the
	meaning assigned by Section 39.916, Utilities Code.
	(2)  "Small commercial customer" has the meaning
	assigned by Section 39.202(o), Utilities Code.
	Sec. 113.002.  APPLICABILITY. (a) This chapter applies to a
	seller or lessor of distributed renewable generation resources.
	(b)  This chapter does not apply to:
	(1)  a transaction involving the sale or transfer of
	the real property on which a distributed renewable generation
	resource is located;
	(2)  a person, including a person acting through the
	person's officers, employees, brokers, or agents, who markets,
	sells, solicits, negotiates, or enters into an agreement for the
	sale or financing of a distributed renewable generation resource as
	part of a transaction involving the sale or transfer of the real
	property on which the distributed renewable generation resource is
	or will be affixed; or
	(3)  a third party that enters into an agreement for the
	financing of a distributed renewable generation resource.
	Sec. 113.003.  LEASE, SALES, AND INSTALLATION DISCLOSURES.
	A seller or lessor who enters into a purchase, lease, or power
	purchase agreement with a residential or small commercial customer
	for the operation of a distributed renewable generation resource
	shall provide to the customer in writing:
	(1)  contact information of the salesperson and
	installer of the generation resource;
	(2)  a description of all equipment to be installed;
	(3)  the cost of all equipment to be installed;
	(4)  a detailed accounting of fees associated with the
	installation or operation of the generation resource;
	(5)  representations, if any, made as part of the
	agreement regarding the expected operational performance and
	financial performance of the generation resource; and
	(6)  all applicable warranties.
	Sec. 113.004.  ADDITIONAL DISCLOSURES FOR LEASE AGREEMENTS.
	In addition to the disclosures required under Section 113.003, a
	lessor shall provide to a leasing residential or small commercial
	customer in writing:
	(1)  the term and rate of the lease, including any
	payment escalators or other terms that affect the customer's
	payments; and
	(2)  a statement of whether the lease and any
	applicable warranty or maintenance agreement is transferable to a
	subsequent purchaser of the property where the distributed
	renewable generation resource is installed.
	Sec. 113.005.  DISCLOSURES FOR POWER PURCHASE AGREEMENTS. A
	residential or small commercial customer who enters into a power
	purchase agreement is entitled to receive in writing:
	(1)  the disclosures required under Sections
	113.003(1), (2), (5), and (6);
	(2)  the term and rate of the power purchase agreement,
	including any payment escalators or other terms that affect the
	customer's payments; and
	(3)  whether the power purchase agreement and any
	applicable warranty or maintenance agreement is transferable to a
	subsequent purchaser of the property where the distributed
	renewable generation resource is installed.
	SECTION 2.  Chapter 229, Local Government Code, is amended
	by adding Subchapter C to read as follows:
	SUBCHAPTER C. REGULATION OF SOLAR ENERGY DEVICES
	Sec. 229.101.  REGULATION OF SOLAR ENERGY DEVICES. (a)  In
	this section:
	(1)  "Municipally owned utility" has the meaning
	assigned by Section 11.003, Utilities Code.
	(2)  "Small commercial customer" has the meaning
	assigned by Section 39.202(o), Utilities Code.
	(3)  "Solar energy device" has the meaning assigned by
	Section 171.107, Tax Code.
	(b)  A municipality may not prohibit or restrict the
	installation of a solar energy device by a residential or small
	commercial customer except to the extent:
	(1)  a property owner's association may prohibit the
	installation under Sections 202.010(d)(1) through (7), Property
	Code; or
	(2)  the interconnection guidelines and
	interconnection agreement of a municipally owned utility serving
	the customer's service area, the rules of the Public Utility
	Commission of Texas, or the protocols of an independent
	organization certified under Section 39.151, Utilities Code, limit
	the installation of solar energy devices due to reliability, power
	quality, or safety of the distribution system.
	SECTION 3.  Subchapter B, Chapter 35, Utilities Code, is
	amended by adding Section 35.037 to read as follows:
	Sec. 35.037.  INTERCONNECTION AND OPERATION OF CERTAIN
	DISTRIBUTED GENERATION FACILITIES FOR FOOD SUPPLY CHAIN. (a) In
	this section:
	(1)  "Customer" means a retail electric customer:
	(A)  with a distributed generation facility
	installed on the retail electric customer's side of the meter; and
	(B)  that has a primary purpose of or derives a
	material source of revenue from:
	(i)  retail grocery sales; or
	(ii)  food manufacturing or distribution for
	retail grocery sales.
	(2)  "Distributed generation facility" means a
	facility installed on the customer's side of the meter but
	separately metered from the customer:
	(A)  with a nameplate capacity of at least 250
	kilowatts and not more than 10 megawatts;
	(B)  that is capable of generating and providing
	backup or supplementary power to the customer's premises; and
	(C)  that is owned or operated by a person
	registered as a power generation company in accordance with Section
	39.351.
	(b)  This section only applies in the ERCOT power region in
	areas where retail customer choice has not been implemented.
	(c)  A person who owns or operates a distributed generation
	facility served by a municipally owned utility or electric
	cooperative in the ERCOT power region may sell electric power
	generated by the distributed generation facility at wholesale,
	including the provision of ancillary services, subject to the
	limitations of this section.
	(d)  A person who owns or operates a distributed generation
	facility may sell electric power generated by the distributed
	generation facility at wholesale to a municipally owned utility or
	electric cooperative certificated for retail service to the area
	where the distributed generation facility is located or to a
	related generation and transmission electric cooperative. The
	municipally owned utility or electric cooperative shall purchase at
	wholesale the quantity of electric power generated by the
	distributed generation facility needed to satisfy the full electric
	requirements of the customer on whose side of the meter the
	distributed generation facility is installed and operated at a
	wholesale price agreed to by the customer and shall resell that
	quantity of power at retail to the customer at the rate applicable
	to the customer for retail service, which must at minimum include
	all amounts paid for the wholesale electric power, during:
	(1)  an emergency declared by the independent
	organization certified under Section 39.151 for the ERCOT power
	region that creates the potential for interruption of service to
	the customer;
	(2)  any service interruption at the customer's
	premises;
	(3)  construction on the customer's premises that
	creates the potential for interruption of service to the customer;
	(4)  maintenance and testing of the distributed
	generation facility; and
	(5)  additional times mutually agreed on by the owner
	or operator of the distributed generation facility and the
	municipally owned utility or electric cooperative.
	(e)  The customer shall provide written notice as soon as
	reasonably practicable to the municipally owned utility or electric
	cooperative of a circumstance described by Subsection (d)(3) or
	(4).
	(f)  In addition to a sale authorized under Subsection (d),
	on request by an owner or operator of a distributed generation
	facility, the municipally owned utility or electric cooperative
	shall provide wholesale transmission service to the distributed
	generation facility owner in the same manner as to other power
	generation companies for the sale of power from the distributed
	generation facility at wholesale, including for the provision of
	ancillary services, in the ERCOT market. The distributed generation
	facility owner shall comply with all applicable commission rules
	and protocols and with governing documents of the independent
	organization certified under Section 39.151 for the ERCOT power
	region. This section does not require a municipally owned utility
	or electric cooperative to transmit electricity to a retail point
	of delivery in the certificated service area of the municipally
	owned utility or electric cooperative.
	(g)  In addition to a sale authorized under Subsection (d) or
	(f), a municipally owned utility or electric cooperative or related
	generation and transmission electric cooperative may purchase
	electric power provided by the owner or operator of the distributed
	generation facility at wholesale at a mutually agreed on price. The
	price may be based wholly or partly on the ERCOT market clearing
	price of energy at the time of day and at the location at which the
	electric power is made available.
	(h)  A municipally owned utility or electric cooperative
	shall make available a standard interconnection application and
	agreement for distributed generation facilities that is
	substantially similar to the commission's interconnection
	agreement form and consistent with this section to facilitate the
	connection of distributed generation facilities. A municipally
	owned utility or electric cooperative shall allow interconnection
	of a distributed generation facility and provide to a distributed
	generation facility on a nondiscriminatory basis wholesale
	transmission service, including at distribution voltage, in the
	same manner as for other power generation companies to transmit to
	the ERCOT power grid the electric power generated by the
	distributed generation facility. A municipally owned utility or
	electric cooperative may recover from the owner or operator of the
	distributed generation facility all reasonable costs necessary for
	and directly attributable to the interconnection of the facility,
	including the reasonable costs of necessary system upgrades and
	improvements directly attributable to the distributed generation
	facility.
	(i)  Not later than the 30th day after the date a complete
	application for interconnection of a distributed generation
	facility is received, the municipally owned utility or electric
	cooperative shall provide the applicant with a written good faith
	cost estimate for interconnection-related costs. The municipally
	owned utility or electric cooperative may not incur any
	interconnection-related costs without entering into a written
	agreement for the payment of those costs by the applicant.
	(j)  The process to interconnect a distributed generation
	facility must be completed not later than the 240th day after the
	date the municipally owned utility or electric cooperative receives
	payment of all estimated costs to complete the interconnection,
	except that:
	(1)  the period may be extended by written agreement
	between the parties; or
	(2)  the period may be extended after a good faith
	showing by the municipally owned utility or electric cooperative
	that the interconnection requires improvements, upgrades, or
	construction of new facilities that cannot reasonably be completed
	within that period, in which case the period may be extended for a
	time not to exceed the time necessary for the improvements,
	upgrades, or construction of new facilities to be completed.
	(k)  A municipally owned utility or electric cooperative
	shall charge the owner or operator of a distributed generation
	facility rates on a reasonable and nondiscriminatory basis for
	providing wholesale transmission service to the distributed
	generation facility owner in the same manner as for other power
	generation companies to transmit to the ERCOT power grid the
	electric power generated by the distributed generation facility in
	accordance with a tariff filed by the municipally owned utility or
	electric cooperative with the commission.
	(l)  The owner or operator of the distributed generation
	facility shall contract with the municipally owned utility or
	electric cooperative or the municipally owned utility's or electric
	cooperative's designee for any scheduling, settlement,
	communication, telemetry, or other services required to
	participate in the ERCOT wholesale market, but only to the extent
	that the utility, cooperative, or designee offers the services on a
	nondiscriminatory basis and at a commercially reasonable cost. If
	the municipally owned utility or electric cooperative or the
	municipally owned utility's or electric cooperative's designee does
	not offer or declines to offer the services, or fails to do so on a
	nondiscriminatory basis and at a commercially reasonable cost as
	determined by quotes from at least three third parties providing
	the same services, the owner or operator of the distributed
	generation facility may contract with a third party provider to
	obtain the services.
	(m)  A distributed 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.
	(n)  A municipally owned utility or electric cooperative is
	not required to interconnect a distributed generation facility
	under this section if, on the date the utility or cooperative
	receives an application for interconnection of the facility, the
	municipally owned utility or electric cooperative has
	interconnected distributed generation facilities with an aggregate
	capacity that equals the lesser amount of:
	(1)  5 percent of the municipally owned utility's or
	electric cooperative's average of the 15-minute summer peak load
	coincident with the independent system operator's 15-minute summer
	peak load in each of the months of June, July, August, and
	September; or
	(2)  300 megawatts, adjusted annually by the percentage
	of total system load growth in the ERCOT power region beginning in
	2022.
	(o)  A municipally owned utility or electric cooperative
	that, on the date the utility or cooperative receives an
	application for interconnection of a distributed generation
	facility, has interconnected distributed generation facilities
	with an aggregate capacity less than the threshold described by
	Subsection (n) is required to increase that capacity only up to that
	threshold.
	(p)  This section is not intended to change registration
	standards or other qualifications required by the independent
	organization certified under Section 39.151 for the ERCOT power
	region related to the participation of distributed generation
	facilities in the wholesale market. This section is not intended to
	allow distributed generation facilities to participate in a manner
	that is not technically feasible or that is otherwise in conflict
	with wholesale rules and requirements adopted by the independent
	organization certified under Section 39.151 for the ERCOT power
	region.
	SECTION 4.  It is the intent of the legislature in enacting
	Section 35.037, Utilities Code, to allow grocers the ability to
	deploy back-up generation in the ERCOT power region in areas that
	have not implemented retail customer choice.
	SECTION 5.  The changes in law made by this Act apply only to
	an agreement governing the sale or lease of distributed renewable
	generation, as defined by Section 39.916, Utilities Code, or a
	power purchase agreement entered into on or after the effective
	date of this Act. An agreement entered into before the effective
	date of this Act is governed by the law as it existed immediately
	before the effective date of this Act, and that law is continued in
	effect for that purpose.
	SECTION 6.  This Act takes effect September 1, 2021.
	______________________________	______________________________
	President of the Senate	Speaker of the House
	I hereby certify that S.B. No. 398 passed the Senate on
	April 9, 2021, by the following vote: Yeas 31, Nays 0; and that
	the Senate concurred in House amendment on May 28, 2021, by the
	following vote: Yeas 31, Nays 0.
	______________________________
	Secretary of the Senate
	I hereby certify that S.B. No. 398 passed the House, with
	amendment, on May 25, 2021, by the following vote: Yeas 126,
	Nays 16, two present not voting.
	______________________________
	Chief Clerk of the House
	Approved:
	______________________________
	Date
	______________________________
	Governor