86th Texas Legislature: Bills Proceed During Session’s Final Days

 

The 2019 Legislative Session adjourns sine die on May 27 — less than a month from today.

 

By our calculation, lawmakers have filed more than 100 bills that relate to gas or electricity. We have categorized and described many of them below, and summarized their legislative progress. We’ve also included a few bills of direct interest to municipalities.

 

Gas Utility Matters

  • House Bill 1767. This bill would direct the Railroad Commission (RRC) to presume the cost of employee compensation and benefits are reasonable and necessary for rate-setting purposes if those expenses are consistent with recent market compensation studies. Although this may sound reasonable on its face, our analysis shows this legislation, if adopted, could lead to higher-than-necessary utility rates and potentially undermine reliability. The House gave final approval to HB 1767 on April 15, and the Senate Committee on Natural Resources and Economic Development debated the bill on May 1.
  • House Bill 864 and House Bill 866. These two bills are among a dozen or so filed by Rep. Rafael Anchia in response to a 2018 gas explosion that killed a 12-year-old girl in Dallas. HB 864 relates to reporting requirements for pipeline incidents. HB 866 relates to the replacement of certain gas pipelines with plastic pipes. The House Committee on Energy Resources has approved both bills and the full House approved them on May 3.

 

Electric Retail Customer Issues

  • House Bill 1408. This legislation would bar the state from operating “a website that lists retail electric service plans or providers for the purpose of enabling or assisting a customer’s selection of a retail electric service plan.” This describes a key function of PowerToChoose.org, the state-sponsored website for electricity shopping. HB 1408 has drawn fire from the consumer watchdog for The Dallas Morning News, who has noted that the bill would effectively kill the PowerToChoose website that over the years has benefited consumers. This is our view also. HB 1408 awaits a hearing in the House Committee on State Affairs.
  • Senate Bill 2066, by Sen. Jose Menendez, would create additional rules for distributed generation and solar contractors. This is a consumer protection bill. The Senate adopted SB 2066 on May 1.  Rep. Richard Raymond has filed an identical companion bill, House Bill 2860.
  • House Bill 3645 by Rep. Tan Parker and Senate Bill 1497 by Sen. Judith Zaffirini would require the registration and regulation of energy brokers at the Public Utility Commission (PUC). These are consumer protection bills. HB 3645 has received a hearing in the House Committee on State Affairs, but not a vote. The Senate approved SB 1497 on April 11 and introduced it to the House. The House Committee on State Affairs approved SB 1497 on April 25.

Issues of interest to Municipalities

  • House Bill 795, by Rep. Jared Patterson, relates to a municipality’s ability to enforce zoning and other land-use regulations against electric companies. Identical to unsuccessful legislation filed in 2017, this bill provides additional clarity regarding the rights of a city to enforce zoning laws, even if those laws conflict with PUC decisions. The city of The Colony has been embroiled in such a dispute with an electric cooperative, and that dispute remains pending on appeal. HB 795 received a hearing on March 5 in the House Committee on Land and Resources, but has not received a vote.
  • House Bill 2263, by Rep. Dade Phelan, relates to the sale of electric power to certain customers. This legislation eliminates the energy sales program operated by the General Land Office (GLO), a program that sells power to cities and other political subdivisions. The legislation also prohibits the charging of the Miscellaneous Gross Receipts Tax (MRGT) on electric sales to school districts. It does not extend this prohibition against charging the MGRT to other political subdivisions, such as cities. The House gave its final approval to this bill on April 9, the Senate Committee on Business and Commerce adopted it on April 30, the full Senate approved it on May 2 and it went to the governor on May 6.
  • Senate Bill 1152, by Sen. Kelly Hancock, could undermine the ability of cities to collect reasonable right-of-way rental fees from cable and telecom companies, according to opponents. Under current law, companies that deliver both cable and telephone services pay cable franchise fees and right-of-way access line fees in exchange for the use of city right-of-way. Under the proposed legislation, such companies would pay the greater of the two charges measured on a state-wide basis, but not both. Critics note that phone and cable companies profit by using the city’s right of way and that nothing would require them to pass along to consumers any savings accrued from the legislation. The Texas Senate approved SB 1152 on April 4 and the Texas House was expected to take it upon May 8. It’s identical companion bill is House Bill 3535, by Rep. Dade Phelan.

Grid Security

  • Senate Bill 936, by Sen. Kelly Hancock, “relat[es] to cybersecurity monitor[ing] for certain electric utilities,” and allows the PUC to create a new “cybersecurity monitor.” This monitor will manage a comprehensive cybersecurity outreach program for monitored utilities; meet regularly with monitored utilities to discuss emerging threats, best business practices, and training opportunities; review self-assessments by monitored utilities of cybersecurity efforts; research and develop best business practices regarding cybersecurity; and report to the PUC on monitored utility cybersecurity preparedness. The legislation received Senate approval on April 4, was adopted by the House Committee on State Affairs on April 18, and now awaits consideration by the full House. Identical companion bills include HB 2591 by Rep. Justin Holland and HB 3377 by Rep. Ana Hernandez.
  • Senate Bill 475, by Sen. Kelly Hancock, establishes the Texas Electric Grid Security Council to facilitate the creation and dissemination of grid security best practices for the electric industry. The bill authorizes a council member to apply for federal secret security clearance and prohibits a member from accessing classified information or participating in a briefing or meeting involving classified information unless the member has such clearance. The bill authorizes the council to prepare a non-classified report and deliver it to the governor, lieutenant governor, and legislature immediately preceding the next regular session of the legislature. SB 475 was adopted by the Senate on April 3, and the House Committee on State Affairs approved it on April 29. Companions include HB 2493 by Rep. Justin Holland and HB 3379 by Rep. Ana Hernandez.
  • House Bill 400, by Rep. Tony Tinderholt, would create a “grid security council” whose members would monitor economic, environmental, regulatory and technological developments that may affect grid security. The legislation received a hearing in the House Committee on State Affairs on March 25, but so far no vote has been taken. HB 400 is among about a half dozen House and Senate bills filed this year that relate to grid security.

Transmission Utilities and ERCOT Generation

  • Senate Bill 1941. This bill would allow transmission and distribution utilities to enter into an agreement with generators to provide power from energy storage facilities. This legislation stems from a recommendation by the PUC that lately has contended with thorny requests from regulated transmission utilities seeking permission to operate utility-scale batteries. The Senate adopted SB 1941 on April 17, and it now awaits consideration in the House Committee on State Affairs.
  • Senate Bill 1211, by Sen. Kelly Hancock, “relat[es] to mergers and consolidations of power generation companies,” and it follows a recommendation from the PUC’s Scope of Competition Report. Under this bill, a power generation company merging with another power generation company within ERCOT must receive PUC authorization if it’s projected that the newly merged company will own or control more than 10 percent of installed generation capacity within ERCOT. This is in contrast to current rules, in which the PUC reviews much smaller mergers. The Senate adopted the legislation on April 11, and the House Committee on State Affairs approved it on April 29. Companion bills include HB 1503 by Rep. Jared Patterson and HB 2553 by Rep. Phil King.
  • Senate Bill 1938 by Sen. Kelly Hancock and House Bill 3995 by Rep. Dade Phelan are related “to certificates of convenience and necessity for the construction of transmission facilities.” These companion bills would limit the ability of non-incumbent utilities to own and operate transmission facilities. That is, the legislation favors incumbent monopolies like Oncor and CenterPoint over transmission-only companies. This legislation has drawn opposition from the Trump administration. The Senate adopted SB 1938 April 17 and the House Committee on State Affairs adopted it on April 28. The full House gave its final approval on May 7.
  • HB 1595, relating to the deployment of advanced metering and meter information networks in certain areas outside ERCOT, is one of several bills intended to encourage the roll out of advanced meter networks by non-ERCOT utilities. HB 1595 has received approval from both chambers and on May 2 sent to the governor.

Renewable Energy and Federal Tax Credits

  • House Bill 2908, by Rep. Jared Patterson, would require the PUC and ERCOT to study how federal tax credits for wind production distort electric pricing within ERCOT. The study should also include consideration of peak price formation, negative pricing, ancillary services, congestion, reserve margins and transmission and distribution costs. As originally crafted, the legislation would have directed the PUC to draft rules to eliminate the effect of such renewable energy tax credits, and craft rules to eliminate the effect of the Operational Reserve Demand Curve. However, those provisions have been dropped from a House committee substitute. The House Committee on State Affairs adopted the committee substitute on April 12.
  • Senate Bill 2232, by Sen. Kelly Hancock, would direct the PUC to study the effects of renewable energy subsidies on the ERCOT market. The legislation also directs the PUC to identify a range of potential actions to eliminate the effects of these subsidies, and it requires the PUC to report its findings back the legislature. The Senate adopted SB 2232 on April 24, and it now awaits consideration in the House Committee on State Affairs.