88R15918 JXC-D     By: Hunter H.B. No. 4832       A BILL TO BE ENTITLED   AN ACT   relating to the reliability of the ERCOT power grid.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  The heading to Section 39.159, Utilities Code,   as added by Chapter 426 (S.B. 3), Acts of the 87th Legislature,   Regular Session, 2021, is amended to read as follows:          Sec. 39.159.  POWER REGION RELIABILITY AND DISPATCHABLE   GENERATION.          SECTION 2.  Section 39.159, Utilities Code, as added by   Chapter 426 (S.B. 3), Acts of the 87th Legislature, Regular   Session, 2021, is amended by amending Subsection (b) and adding   Subsections (b-1) and (d) to read as follows:          (b)  The commission shall ensure that the independent   organization certified under Section 39.151 for the ERCOT power   region:                (1)  establishes requirements to meet the reliability   needs of the power region;                (2)  periodically, but at least annually, determines   the quantity and characteristics of ancillary or reliability   services necessary to ensure appropriate reliability during   extreme heat and extreme cold weather conditions and during times   of low non-dispatchable power production in the power region;                (3)  procures ancillary or reliability services on a   competitive basis to ensure appropriate reliability during extreme   heat and extreme cold weather conditions and during times of low   non-dispatchable power production in the power region;                (4)  develops appropriate qualification and   performance requirements for providing services under Subdivision   (3), including appropriate penalties for failure to provide the   services; [and]                (5)  sizes the services procured under Subdivision (3)   to prevent prolonged rotating outages due to net load variability   in high demand and low supply scenarios; and                (6)  allocates the cost of providing ancillary services   and reliability services procured under this section on an annual   basis among dispatchable generation facilities, non-dispatchable   generation facilities, and load serving entities in proportion to   their contribution to net load variability over the highest 100   hours of net load in the preceding year as follows:                      (A)  for dispatchable generation facilities, the   difference between the mean of the highest quartile forced outage   rate for the facility and the mean forced outage rate of all   dispatchable generation facilities in the ERCOT power region;                      (B)  for non-dispatchable generation facilities,   the difference between the mean of the lowest quartile generation   for each non-dispatchable generation facility, divided by the   installed capacity of that facility, and the mean generation of all   non-dispatchable generation facilities in the ERCOT power region,   divided by the total installed capacity of all non-dispatchable   generation facilities in the ERCOT power region; and                      (C)  for load serving entities, the difference   between the mean of the highest quartile of each entity's metered   load and the mean of each entity's metered load.          (b-1)  Subsection (b)(6) applies only to a generation   facility or load serving entity that has participated in the ERCOT   market for at least one year.          (d)  The commission shall require the independent   organization certified under Section 39.151 for the ERCOT power   region to develop an ancillary services program that requires load   serving entities to purchase dispatchable reliability reserve   services on a day-ahead basis to account for market uncertainty.   The program must provide payments only to generation resources that   are not providing other ancillary services. The commission must   require the independent organization to:                (1)  determine the quantity of services necessary based   on historical variations in generation availability for each season   based on a targeted reliability standard or goal, including   renewable intermittency and forced outage rates; and                (2)  develop criteria for resource participation that   require a resource to:                      (A)  have a runtime of at least four hours;                      (B)  be available not less than two hours after   being called on for deployment; and                       (C)  have the dispatchable flexibility to address   inter-hour operational challenges.          SECTION 3.  Subchapter D, Chapter 39, Utilities Code, is   amended by adding Section 39.1591 to read as follows:          Sec. 39.1591.  REPORT ON DISPATCHABLE AND NON-DISPATCHABLE   GENERATION FACILITIES.  The commission shall file an annual report   with the legislature that:                (1)  includes:                       (A)  the estimated annual costs required to be   incurred under this subchapter by non-dispatchable generators to   guarantee that a firm amount of electric energy will be provided for   the ERCOT power grid; and                      (B)  the cumulative annual transmission costs   that have been incurred in the ERCOT market to facilitate the   transmission of non-dispatchable electricity to load;                (2)  documents the status of the implementation of this   subchapter, including whether the rules and protocols adopted to   implement this subchapter have materially improved the   reliability, resilience, and transparency of the electricity   market; and                (3)  includes recommendations for any additional   legislative measures needed to empower the commission to implement   market reforms to ensure that market signals are adequate to   preserve existing dispatchable generation and incentivize the   construction of new dispatchable generation sufficient to maintain   reliability standards for at least five years after the date of the   report.          SECTION 4.  (a)  Not later than September 1, 2024, the   Public Utility Commission of Texas shall implement the changes in   law made by this Act to Section 39.159(b), Utilities Code, as added   by Chapter 426 (S.B. 3), Acts of the 87th Legislature, Regular   Session, 2021.          (b)  Not later than December 1, 2024, the Public Utility   Commission of Texas shall implement the changes in law made by this   Act in Section 39.159(d), Utilities Code, as added by this Act.          (c)  The Public Utility Commission of Texas shall prepare the   portion of the first report required by Section 39.1591(1),   Utilities Code, as added by this Act, not later than December 1,   2023.          (d)  The Public Utility Commission of Texas shall prepare the   portions of the first report required by Sections 39.1591(2) and   (3), Utilities Code, as added by this Act, not later than December   1, 2024.          SECTION 5.  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.