TX Legislature Passes Senate Bill 2, 3; Here Are Details

May 31, 2021 — After months of wrangling, the Texas Legislature on Sunday passed legislation that reorganizes portions of the ERCOT regulatory system along with PUC protocols and oversight.

The bills require the weatherization of power plants and some natural gas facilities, one of the top recommendations from experts to avoid a repeat of the February Winter Storm Uri blackouts.

The bill would mandate that important gas facilities are registered as critical infrastructure to which power won’t be cut in an emergency, fulfilling another of the top recommendations by energy experts.

And the bill requires agencies to talk to each other during emergencies; lack of communication was a major problem during the storm, as was lack of contact with the public, which the bill also attempts to fix.

The key parts of Senate Bill 3 passed Sunday evening after both chambers accepted rewrites from a House-Senate conference committee.

And a portion of the bill that would have allowed at least one member of energy-related boards to be a representative of consumers was scrubbed.

The House passed HB 4492, the companion bill to SB 3.

The bills leave much control over natural gas, the main component of electricity production, to the Railroad Commission and to suppliers themselves.

A key portion of the bill, relief for ratepayers on their energy bills, was left out after lawmakers debate for hours over the weekend over how to fund such measures without reaching a solution.

Under the bill, the Texas Electric Securitization Corp. is created, with bonds to be issued on a nonrecourse basis “to the credit or any assets of the state.”

The state would develop an alert system to be activated when Texas power supplies are expected to be inadequate for demand, to be developed by the PUC in cooperation with TXDoT, state emergency management and the governor’s office — and the system will work with commercial TV and radio along with other private entities, local governments and the public as part of the alert system.

The bill establishes the Texas Energy Reliability Council to enhance cooperation among state agencies related to energy, a council that includes the RRC chair, PUC presiding officer, the chief exec of the PUC Counsel, the TCEQ presiding officer, the Texas Transportation Commission chair, an ERCOT rep and 13 people to represent industry (5 for the electric industry (appointed by the PUC) along with 5 to represent “industrial concerns” (governor appointed) and three people to represent “energy sectors not otherwise represented on the council.”

The Council will collaborate with the PUC for rules to name “certain natural gas facilities” as critical customers or critical suppliers during emergencies.

The State Climatologist will provide reports to be considered ahead of time in deciding the severity of possible weather emergencies that may affect power supplies.

The climatologist must also be consulted in PUC rule-making.

The Texas Attorney General will receive complaints about operators who do not comply with the rules and do not provide remedies within a “reasonable” amount of time.

The bill also provides definitions for “critical care residential customers” and “critical load industrial customers,” defining circumstances for power providers when cutting electricity to, for example, nursing homes and emergency shelters.

The PUC, under the bill, would allow transmission and distribution utilities facilities to create a load management system for business customers.

The bill as produced by the conference committee doesn’t appear to have what has been previously criticized as “anti-renewables” language.

The bill also will require the PUC to “modify” ancillary services “in a manner consistent with cost-causation principles” — language in the bill indicates ancillary service costs must be “reasonable.”

ERCOT is also tasked with inspecting electricity “generation assets” in compliance with reliability standards.

The bill provides specific language on emergency preparedness for power emergencies and on load shedding (blackouts) voluntary and involuntary.

And the bill creates the Texas Electricity Supply Chain Security and Mapping Committee for mapping critical infrastructure, establish “best practices” for emergency preparedness, designate priority service needs. designate critical infrastructure — with the committee to be made up of the chair of the Texas Division of Emergency Management, the ERCOT CEO, the exec director of the RRC and the PUC’s exec director.

But the bill doe not create an ability to pay for weatherization of power generation in any form, nor does it provide for electricity generation fuel to be stored on sites.

Senate Bill 2

The legislature also passed SB 2, which overhauls portions of the ERCOT regulatory system and the PUC’s oversight of ERCOT.

Under the bill, members of the ERCOT board are required to live in Texas, to be appointed by the governor, the lieutenant governor and speaker of the house.

Critics say that adds a new dimension of politics to the system,

The legislature has also passed debt payments to gas and electric providers totaling about $9 million to be payed by ratepayers over the next two decades.

The Senate also passed Senate Bill 1281

And the Senate passed House Bill 4492 to “protect consumers from sky-high” electricity bills, as Sen. Kelly Hancock put it, while “securitizing costs associated with electric markets; granting authority to issue bonds,” as the bill states.

The bill would also loan the equivalent of $800 million to ERCOT to cover money it’s owed because of the power crisis, and $3.2 billion will be put up by the state in bonds for electric companies and retail providers (the state will get better bond rates but ratepayers back them).

The bill does allow electricity companies to pass through to consumers some costs because of the winter storm.

Members of the Senate pointed out that it received a final version of HB 4492 just minutes before the deadline of midnight Saturday, causing problems in assembling a Senate sign-off (passage) on the bill.

Senators also complained that the House removed some relief to consumers from high electricity bills, including a $350 credit for consumers toward those bills.

However, Sen. Hancock pledged Sunday night to request Gov. Abbott to add consumer rate relief to the priorities required during any upcoming special session of the Legislature.

Private property rights advocates enjoyed a victory after HB 2730 passed the Texas Senate on Thursday. Senators approved the legislation in the overnight hours, which protects and improves landowner rights in negotiations with entities using the power of eminent domain.

The Texas Energy Report will shortly provide a roundup of Texas energy-related bills that have been passed.