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