Update on the 86th Texas Legislature
Lawmakers filed more than 6,000 bills during the 86th Texas Legislature. More than 100 of these related to the affordability and reliability of utility service and scores more related to issues of interest to municipalities. Just below we have detailed many of the key bills on the TCAP watch list and summarized their final disposition. The Texas Legislature adjourned sine die on May 27. As you can see, the disposition of some of these key bills will end up affecting cities or their ratepayers.
Among the wins for cities or their citizens:
- The adoption by the Texas Legislature of HB 864 and 866, both relating to gas pipeline safety in the wake of a fatal explosion last year on the Atmos system.
- The legislative rejection of HB 1408 that would have — had it passed — caused the suspension of the consumer-friendly PowerToChoose.Org website.
- The adoption of SB 1497 that requires registration of energy brokers. This is a pro-consumer bill.
- The failures of HB 1766 and HB 1768 that would have — had they passed — loosened regulatory oversight of electric utility employee compensation and thereby led to potentially higher rates
- The addition of pro-consumer amendment to House Bill 1767 that slightly softens the deleterious effect of language similar to that included HB 1766 and HB 1768, but in HB 1767 it relates to employee compensation for gas utilities.
Among the losses:
- The failure of House Bill 795 that would have provided clarity for cities attempting to enforce zoning laws if those laws conflict with PUC decisions.
- The adoption of SB 1152 that could undermine the ability of cities to collect reasonable right-of-way rental fees from cable and telecom providers.
- The failure of House Bill 2011 that would have prohibited the collection of the miscellaneous gross receipts tax from city governments for their electricity purchases.
We have described many of these bills below and noted their disposition in RED text. Note that unless we otherwise indicate, the bills marked PASSED still require the governor’s signature. Gov. Greg Abbott has until June 16 to sign or veto bills.
Gas Utility Matters
House Bill 1767
Directs the Railroad Commission to presume the cost of employee compensation and benefits are reasonable for rate-setting purposes if those expenses are consistent with recent market compensation studies. Our analysis shows this legislation could lead to higher-than-necessary utility rates. The House gave final approval to HB 1767 on April 15, and the Senate approved a separate version on May 14. The Senate version removes from HB 1767 any consideration of compensation for named executive officers for gas utilities.
Status: PASSED. The House on May 24 concurred with Senate amendments and the legislation went to the governor on May 26.
House Bill 864 & House Bill 866
These two bills are among about a dozen 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.
Status: PASSED. The House and Senate adopted both bills. HB 866 went to the governor on May 22 and HB 864 went on May 29.
Electric Retail Customer Issues
House Bill 1408
This legislation would have barred 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.” HB 1408 has drawn fire from the consumer watchdog for The Dallas Morning News, who noted it would effectively kill the PowerToChoose website. This is our view also.
Status: DEAD. HB 1408 died without receiving a hearing.
Senate Bill 1497
By Sen. Judith Zaffirini would require the registration and regulation of energy brokers at the Public Utility Commission.
Status: PASSED. Both chambers approved this bill (including Senate amendments), and it went to the governor on May 25.
Electric Retail Customer Issues
House Bill 795
By Rep. Jared Patterson, 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.
Status: DEAD. HB 795 received a hearing on March 5 in the House Committee on Land and Resources, but it died without further legislative action.
House Bill 2263
By Rep. Dade Phelan, eliminates the energy sales program operated by the General Land Office, a program that sells power to cities and other political subdivisions. The legislation also prohibits the charging of the Miscellaneous Gross Receipts Tax on electric sales to school districts. It does not extend this prohibition against charging the MGRT to other political subdivisions, such as cities.
Status: PASSED. The House gave its final approval to this bill on April 9, the full Senate approved it on May 2 and it went to the governor on May 6.
House Bill 2011
Would have prohibited the collection of the miscellaneous gross receipts tax from municipalities and other public retail customers for their electricity purchases.
Status: DEAD: This bill died without making it to the House floor.
Senate Bill 1152
By Sen. Kelly Hancock, restricts the collection by municipalities of right-of-way rental fees from cable and telecom companies.
Status: PASSED. The Texas Senate approved SB 1152 on April 4, the Texas House gave its final approval on May 9 and the Senate concurred with House amendments. SB 1152 went to the governor on May 25.
Senate Bill 936
By Sen. Kelly Hancock, allows the PUC to create a new “cybersecurity monitor.” This new monitor will manage a comprehensive cybersecurity outreach program for utilities; review self-assessments of cybersecurity efforts by utilities and research best practices.
Status: PASSED. SB 936 received approval in both the House and Senate. It went to Gov. Abbott on May 25.
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 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.
Status: PASSED. The Texas House and Senate approved SB 475 and on May 21 the Senate concurred with House amendments. It went to Gov. Abbott on May 25.
Transmission Utilities & ERCOT Generation
Senate Bill 1941
This bill would have allowed 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.
Status: DEAD. The Senate adopted SB 1941 on April 17, and the House Committee on State Affairs approved it on May 14. However, it died before getting to the full House.
Senate Bill 1211
By Sen. Kelly Hancock, follows a recommendation from the PUC. Under SB 1211, a power generation company merging with another power generator must receive PUC authorization if 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.
Status: PASSED. The legislation went to the governor on May 21.
Senate Bill 1938
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 drew opposition from the Trump administration.
Status: PASSED. 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. The governor signed the legislation on May 16.
House Bill 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.
Status: PASSED. Governor Abbott signed HB 1595 on May 14.
Renewable Energy & Federal Tax Credits
House Bill 2908
Would have required the PUC and ERCOT to study how federal tax credits for wind production distort electric pricing within ERCOT. 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 an ERCOT wholesale energy pricing mechanism known as the Operational Reserve Demand Curve.
Status: DEAD. The House Committee on State Affairs adopted a committee substitute on April 12, but HB 2908 died without proceeding further in the legislative process.
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 report its findings back the legislature.
Status: DEAD. The Senate adopted SB 2232 on April 24, but it died without having received consideration in the House.