88R25766 JXC-D     By: Schwertner, et al. S.B. No. 2012     (Hunter)     Substitute the following for S.B. No. 2012:  No.       A BILL TO BE ENTITLED   AN ACT   relating to the implementation of a program to meet the reliability   needs of the ERCOT power region.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Subchapter D, Chapter 39, Utilities Code, is   amended by adding Section 39.166 to read as follows:          Sec. 39.166.  RELIABILITY PROGRAM. (a) The commission may   not require retail customers or load-serving entities in the ERCOT   power region to purchase credits designed to support a required   reserve margin or other capacity or reliability requirement until:                (1)  the independent organization certified under   Section 39.151 for the ERCOT power region and the wholesale   electric market monitor complete an updated assessment on the cost   to and effects on the ERCOT market of the proposed reliability   program; and                (2)  the independent organization certified under   Section 39.151 for the ERCOT power region begins implementing real   time co-optimization of energy and ancillary services in the ERCOT   wholesale market.          (b)  The assessment required under Subsection (a) must   include:                (1)  an evaluation of the cost of new entry and the   effects of the proposed reliability program on consumer costs and   the competitive retail market;                (2)  a compilation of detailed information regarding   cost offsets realized through a reduction in costs in the energy and   ancillary services markets and use of reliability unit commitments;                (3)  a set of metrics to measure the effects of the   proposed reliability program on system reliability;                (4)  an evaluation of the cost to retain existing   dispatchable resources in the ERCOT power region;                (5)  an evaluation of the planned timeline for   implementation of real time co-optimization for energy and   ancillary services in the ERCOT power region; and                (6)  anticipated market and reliability effects of new   and updated ancillary service products.          (c)  The commission may not implement a reliability program   described by Subsection (a) unless the commission by rule   establishes the essential features of the program, including   requirements to meet the reliability needs of the power region, and   the program:                (1)  requires the independent organization certified   under Section 39.151 for the ERCOT power region to procure the   credits centrally in a manner designed to prevent market   manipulation by affiliated generation and retail companies;                (2)  limits participation in the program to   dispatchable resources with the specific attributes necessary to   meet operational needs of the ERCOT power region;                (3)  ensures that a generator cannot receive credits   that exceed the amount of generation bid into the forward market by   that generator;                (4)  ensures that an electric generating unit can   receive a credit only for being available to perform in real time   during the tightest intervals of low supply and high demand on the   grid, as defined by the commission on a seasonal basis;                (5)  establishes a penalty structure, resulting in a   net benefit to load, for generators that bid into the forward market   but do not meet the full obligation;                (6)  provides the wholesale electric market monitor   with the authority and resources necessary to investigate potential   instances of market manipulation by any means, including by   financial or physical actions;                (7)  ensures that the net cost imposed on the ERCOT   market for the credits does not exceed $500 million annually;                (8)  ensures that any program reliability standard   reasonably balances the incremental reliability benefits to   customers against the incremental costs of the program based on an   evaluation by the wholesale electric market monitor;                (9)  establishes a single ERCOT-wide clearing price for   the program and does not differentiate payments or credit values   based on locational constraints;                (10)  does not assign costs, credit, or collateral for   the program in a manner that provides a cost advantage to   load-serving entities who own, or whose affiliates own, generation   facilities;                (11)  requires sufficient secured collateral so that   other market participants do not bear the risk of non-performance   or non-payment;                (12)  ensures that the cost of all credits paid to   dispatchable resources is allocated to loads based on an hourly   load ratio share; and                (13)  removes any market changes implemented as a   bridge solution for the program not later than the first   anniversary of the date the program was implemented.          (d)  The commission and the independent organization   certified under Section 39.151 for the ERCOT power region may not   adopt a market rule for the ERCOT power region associated with the   implementation of a reliability program described by Subsection (a)   that provides a cost advantage to load-serving entities who own, or   whose affiliates own, generation facilities.          (e)  The wholesale electric market monitor biennially shall:                (1)  evaluate the incremental reliability benefits of   the program for consumers compared to the costs to consumers of the   program and the costs in the energy and ancillary services markets;   and                (2)  report the results of each evaluation to the   legislature.          SECTION 2.  This Act takes effect immediately if it receives   a vote of two-thirds of all the members elected to each house, as   provided by Section 39, Article III, Texas Constitution. If this   Act does not receive the vote necessary for immediate effect, this   Act takes effect September 1, 2023.