Representative Patterson introduced HB3356 aiming to eliminate the reliability requirements only applicable to generators built after 2026.
The existing law, HB1500, called for such requirements for new generators starting in 2027.
The motivation is to create a level playing field for all generators to ensure reliability and guard against dependence on inconsistent renewable resources, highlighted by failures during events like winter storm Uri.
Electricity rates had been declining until disruptions like COVID-19, winter storm Uri, and high natural gas prices in 2022 drove rates up.
ERCOT forecasts a significant increase in peak demand by 2030, creating concern over relying on non-firm generation sources.
The market's current state, heavily influenced by subsidies favoring renewable energy, challenges the revenue prospects for other generators.
Volatility in the power market induced by intermittent renewable energy sources adds significant costs to consumer bills.
Patterson argues for early implementation of the reliability requirements for all generators to mitigate the risks and ensure power availability.
▶️Siva Josyula, TSSA & APA - Public Testimony HB3356
Siva Josyula, principal consultant with PA Consulting Group, testified on behalf of the Texas Solar and Storage Association and the Advanced Power Alliance against HB3356.
He argues that retroactive legislation damages investor confidence, undermining certainty and stability necessary for long-term infrastructure investments.
The bill imposes potentially unrecoverable costs on existing assets, increasing consumer costs, with solar resources impact alone potentially raising costs by $1.6 billion annually.
The ERCOT market is already delivering firming through private investment, with market signals driving the deployment of flexible, quick-responding resources.
The bill creates operational challenges by administratively defining periods of system need, which could distort ERCOT's market price signals and complicate grid operations.
▶️Walt Baum, Powering Texans - Public Testimony HB3356
Walt Baum from Powering Texans testified against HB3356 as filed.
He supports the intent behind the bill but expressed concerns about its potential negative impacts.
Baum highlighted challenges with grid operations due to increased renewables.
Expressed concern that the bill could lead to early retirements of existing thermal generation, particularly older peaker plants.
Worried about double penalties on existing thermal generation due to firming requirements in the bill.
Mentioned potential lowering of peak prices and new penalties for older generators.
Powering Texans is collaborating with Chairman Patterson to address these issues.
No questions were raised by the members for Walt Baum.
Clif Lange from South Texas Electric Co-op (STEC) testified in favor of HB3356.
STEC is a generation and transmission cooperative serving 345,000 end-use members across 47 South Texas counties.
STEC has been paying for firming resources for many years, advocating that the market should help cover these costs.
Lange emphasized that all capacity, not just renewables, should be firm and backed by dispatchable resources.
STEC had firming resources prior to the Uri event, which benefited the market while their members still participated in load shedding.
Lange disagreed with past arguments that similar mechanisms failed in the ERCOT market, claiming the current proposal is different and potentially more effective.
The proposed mechanism in HB3356 aims to properly allocate the costs of firming resources to all consumers.
STEC is committed to working with Representative Patterson to strengthen the bill and its firming requirements.
▶️Representative Raymond to Clif Lange, HB3356 - Compensation for Firming
ERCOT representatives discussed consequences and lack of preparedness during Winter Storm Uri.
Mentioned that co-ops are firming generation capacity on their own without market compensation.
ERCOT's portfolio includes dispatchable natural gas and coal to support system reliability.
Reliability benefits are provided to all ERCOT despite costs being borne by co-op members.
Expressed need for market mechanisms to recognize and compensate for firming efforts.
Highlighted the reliability demand when solar energy is unavailable, recognizing the value of renewables despite the need for backup.
Emphasized improving system reliability to support economic growth as critical for ERCOT consumers.
▶️Cyrus Reed, Sierra Club - Public Testimony HB3356
Winter storm Uri highlighted failures in all kinds of energy resources: wind, solar, gas, coal, nuclear.
HB3356 would impose firm requirements on current generators, viewed as a 'tax on consumers' increasing electricity prices.
Sierra Club supported HB1500, which allows future imposition of firming requirements on new generators.
Opposition to applying firming requirements to all existing generators, due to cost concerns for consumers.
Advocacy for using ancillary services to meet electricity needs as a more effective solution.
Acknowledgment of additional costs on consumers due to ERCOT's conservative operations.
Emphasis on market mechanisms and creation of ancillary services for reliability of the grid.
Opposition to HB3356 declared due to concerns about public policy and consumer costs.
Jason Isaac, CEO of the American Energy Institute, supports HB3356.
Highlighting lack of market structure to reward reliability in energy generation.
Citing Governor Abbott's directive post-Winter Storm Uri to allocate reliability costs to generation resources lacking guaranteed availability, like wind and solar, which hasn't been implemented.
Electricity costs in Texas increased by 28% between 2020 and 2024.
Rise in disconnections: 5 million Americans lost access to primary utilities between 2022 and 2023, a 30% increase.
Disconnection is a leading economic indicator for homelessness due to agreement terms in homeownership and leasing.
Criticism of economic incentives causing over-investment in unreliable energy sources.
Claim that rewarding reliability could have reduced investments drastically, preventing issues like Winter Storm Uri.
No questions were directed to Mr. Isaac during the testimony.
▶️Michael Jewell, Sol Systems - Public Testimony HB3356
Sol Systems is a national solar developer active in 38 states; starting an 80 MW project (Nightfall Solar) in Uvalde County, Texas.
$250M investment; projected $30M in lifetime net fiscal benefits to the local community.
HB3356 would alter project economics late in development, risking project cancellation.
Firming requirements proposed in the bill have historically failed in ERCOT.
Past ERCOT firming attempts (2003–2010) were abandoned due to inefficiencies and grid reliability issues.
Reinstating firming could deter investment in Texas energy projects, which are critical given ERCOT’s projected growth.
Chairman Darby explained HB4290, which aims to support the integration of power generation, desalination, and data center infrastructure.
The bill seeks to clarify the definition of industrial products under Texas law, specifically including digital products and desalinated water.
Clarifies that cogeneration facilities supplying power and thermal energy to desalination and data center operations are recognized as qualifying cogenerators.
Encourages the beneficial use of produced water through desalination, providing a new source of water for industrial and agricultural uses.
Members were asked if they had any questions for Chairman Darby; none were raised.
Public testimony was briefly touched upon, with mentions of Michael Dobbs and Clif Lange registering their positions, but not testifying.
No additional individuals testified for or against HB4290.
The chair recognized Chairman Darby to close on the discussion of HB4290, which was then left pending without objection.
Chair lays out HB4302 and introduces a committee substitute.
The bill focuses on vegetation management to prevent outages and fire risks caused by tree branches near power lines.
Regular and responsible tree trimming is necessary as Texas grows and utilities expand.
Utilities face litigation over recovery costs for vegetation management, creating uncertainty.
The bill aims to create a structured and transparent process for cost recovery specifically for distribution systems.
Utilities must submit a detailed vegetation management plan to the PUC.
Cost recovery is through a separate rider mechanism with an annual true-up process.
Vegetation costs in approved resiliency plans must be excluded to avoid double recovery.
The process is administrative with no automatic hearings; stakeholders can submit comments.
Public Utility Council must act on new plan approvals within 60 days.
Committee substitute HB4302 provides a clear path for utilities to recover costs.
Representative Thompson questions the determination of cost per person and the absence of required hearings.
Discussion on implications if a person cannot pay vegetation costs, including tax and lien concerns.
▶️Thomas Mercado, OCSC & TCAP - Public Testimony HB4302
Thomas Mercado testified against HB4302 on behalf of OCSC and TCAP.
Mercado supports robust vegetation management by utilities that respects landowners to ensure system reliability.
Advocates for a structured framework for managing vegetation management costs in the public interest.
Opposes the bill, citing it as unnecessary with implementation issues, leading to piecemeal rate cases.
Claims existing mechanisms like EECRF, DCRF, and TCRF adequately support vegetation management cost recovery.
The bill aims to introduce new cost recovery factors which Mercado argues are redundant.
Explains that utilities already have flexibility in spending revenues including on vegetation management.
Mentions HB2555 from the last session allows utilities to recover incremental vegetation costs.
Cites Oncor as an example with large allocated funds for vegetation management in base rates.
Reveals Oncor's ability to recover significant incremental costs through existing laws.
Mercado confirms utilities can already collect and be reimbursed for these services.
▶️Jason Ryan, CenterPoint Energy - Public Testimony HB4302
Jason Ryan expressed gratitude to Chairman King, Vice Chair Hernandez, committee members, and Chairman Metcalfe for their efforts in filing the bill.
CenterPoint Energy aims to be the most resilient coastal grid amidst challenges like hurricanes that down trees on power lines.
The discussion focused on distribution lines, half of which are underground, with 25,000 miles subject to high wind risks.
CenterPoint Energy has a program, 'Right Tree Right Place', to guide customers in planting trees appropriately.
The cost of tree trimming fluctuates due to weather conditions, making it unstable to include in base rates.
Representative Thompson asked about determining customer costs, which involves a competitive bidding process and assessment by the Public Utility Commission.
Current billing structure doesn't reimburse customers if less is spent than predicted, a point the bill aims to address.
Clarification was sought on whether services are charged before they are provided; Jason Ryan stated services are charged post-delivery and he would confirm details on the bill.
The importance of municipal involvement in encouraging lower tree heights to prevent interference with power lines was highlighted.
Anna Givens introduced herself as the director of financial review within the rate regulation division at the Public Utility Commission of Texas.
Discussion focused on the mechanics of HB4302, which involves a utility presenting a vegetation management plan with projected costs, and establishing a cost recovery factor added to a customer bill.
There is a true-up process annually to adjust for overspend or underspend by the utility, ensuring the customer is made whole.
The process comparison was made between historical cost basis programs versus forecasted projections.
Concerns were raised about upfront payments based on historical amounts, similar to energy efficiency cost recovery factors.
Discussion about the committee substitute which narrowed the bill's scope to distribution only, following feedback from stakeholders.
The focus of the bill was to address issues like trimming vegetation impacting distribution lines, highlighted by examples from previous storms.
No objections were raised to leaving HB4302 pending at the meeting's conclusion.
Chairman Smithee introduced bill HB4511 and provided an explanation.
Focus on wind energy development in the Texas Panhandle and West Texas.
Bill aims to clarify the relationship between landowners and wind developers.
A substitute for the bill is forthcoming, details not discussed.
Bill goals are to protect landowners and not impede wind energy development in Texas.
Initial proposal to sever wind rights as a property right, similar to oil and gas, will be removed.
Wind rights to remain part of the surface estate due to the temporary nature of wind developments.
Existing laws govern wind developer responsibilities for turbine removal.
Bill intended to mitigate liability risks for landowners from wind leases.
Efforts made to gather input to reduce ambiguity and create certainty in landowner-developer relationships.
Representative Raymond posed a question for further discussion.
▶️Representative Raymond to Representative Smithee, HB4511 - Clarification of the Bill
Discussion on the liability limitations for landowners when wind energy equipment isn't operational anymore.
Clarification of the relationship between wind developers and landowners, including whether wind rights should be part of the surface lease.
Current leases generally provide royalties based on energy revenue produced.
Concerns about potential modern-day abandoned wind platforms akin to abandoned oil wells.
Suggestion to require wind developers to set aside funds for equipment removal to prevent financial burden on landowners.
Current legal uncertainty regarding the property rights between wind developers and landowners in Texas.
Comparison to oil and gas leases and exploration of whether similar methods apply or not.
▶️Representative Anchía to Representative Smithee, HB4511 - Clarification of the Bill
Representative Anchía expressed agreement on the need for legal certainty and risk allocation in arrangements involving landowner rights.
A robust decommissioning statute for wind energy exists, which defines developer obligations, passed by the legislature recently.
The purpose of HB4511 is to provide legal clarity on the rights and obligations above the surface estate, including defining leasehold or property owner estates.
No questions or testimonies were presented for or against HB4511.
Chairman Smithee closed on the bill, and HB4511 was left pending with no objections.
HB4581 aims to improve emergency response by streamlining leasing and deployment of mobile electric generation during major outages.
The bill allows utilities to lease temporary emergency energy facilities that operate independently of the grid and can deliver power within three hours.
During declared disasters, leasing can occur without competitive bidding or prior commission approval if capacity is essential.
The TDEM is directed to maintain a database of mobile units in cooperation with the PUC and utility providers.
Utility providers must enter into mutual aid agreements and keep available unit lists updated with TDEM.
If a provider leases but fails to deploy mobile generation without justification, the PUC can review and address the failure.
The bill provides the PUC with discretion in reviewing such instances and decision-making processes.
Future refinements of the procedures will be based on further stakeholder discussions.
The bill ensures rapid, collaborative, and effective response while maintaining transparency and accountability.
▶️Jason Ryan, CenterPoint Energy - Public Testimony HB4581
Jason Ryan from CenterPoint Energy thanked Chairman King, Chairman Guillen, and the committee for considering HB4581.
The bill provides clarifications and directions for transmission distribution utilities, especially post natural disasters like hurricanes.
There is a discussion around focusing the legislation on smaller units to restore power to critical facilities during major storm events.
Stakeholders suggested that the units be managed by TDEM for efficiency, instead of each utility maintaining a separate stockpile.
There is a discussion whether utilities should purchase or lease the units, with the view that purchasing could be cheaper for ratepayers.
The lifespan of the units depends on usage, but generally ranges from ten to twenty years.
No one testified for or against HB4581 from the Texas Consumer Association.
The bill was left pending without objection after further discussion and will be revisited with a committee sub shortly.
David Nash supports HB4627 but is concerned about geographic differences in the state regarding national electric safety standards.
He discusses a National Electric Safety Code (NESC) district loading map from 1916 that divides Texas into three zones.
Issues highlighted by Nash pertain to the criteria for radial ice and wind pressure on distribution lines, particularly in the bottom zone of the map.
He notes personal observations of pole failures due to ice rather than wind, emphasizing the need for updated design standards considering hard freezes.
Nash argues that outdated standards should be revised to prevent future problems.
No questions were raised by the members following Nash's testimony.
Ryan Brown thanked committee members and representative McQueeney for engaging with them.
Sam Houston Electric Cooperative (SHEC) focuses on reliable electric service and maintaining a pole testing program for 50 years, showing low pole failure rates.
During Hurricane Beryl, over 90% lost power but was restored in six days, with less than 0.1% of poles needing replacement.
Concerns were raised about new regulations potentially disrupting their current program.
SHEC suggests a regulation framework similar to the PUC's emergency operations plan reporting.
SHEC is open to adapting the bill with minor changes that align with their current practices and provide transparency.
Discussion on the longevity of SHEC's pole inspection process which started in 1977.
Ryan Brown expressed willingness to work with the bill's author to find a mutually agreeable solution.
SHEC aims to comply with the proposed bill while maintaining their existing process.
▶️Jason Ryan, CenterPoint Energy - Public Testimony HB4627
Jason Ryan from CenterPoint Energy gave public testimony regarding HB4627.
Ryan expressed full support for Section 3 of the bill, which involves PUC setting standards for utility poles.
CenterPoint Energy owns approximately 1,200,000 poles in the Greater Houston area.
Concerns were raised about Section 1 of the bill, specifically the penalty provision.
Ryan proposed that the penalty should apply only if the company is not complying with PUC standards or lacks a PUC-approved compliance plan.
Compliance with newly-set standards may require time due to the large number of poles managed.
No questions were posed to Ryan by committee members.
HB4627 was left pending with no objections from the committee.
HB4668 gives the PUC authority to retain outside experts such as consultants, accountants, auditors, engineers, or attorneys for state and regional proceedings.
Utilities are required to cover the reasonable costs of these services, capped at $1,500,000 annually.
The costs can be recovered through a commission-reviewed rider, ensuring the PUC has necessary resources without burdening taxpayers.
The bill prohibits hiring anyone required to register as a lobbyist to ensure transparency and avoid conflicts of interest.
There was no public testimony for or against HB4668.
HB4668 is left pending with no objection.
The committee meeting was adjourned with no further business to address.
