Bell Bill Ends Sales Tax On Backup Generators Under 200 Kilowatts

The text as introduced · 662 words

89R4443 JXC/CJC-D

By: Bell of Montgomery
H.B. No. 2303

A BILL TO BE ENTITLED

AN ACT

relating to electric market payments for and an exemption from

sales and use taxes for customer-sited distributed generation.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subchapter H, Chapter 151, Tax Code, is amended

by adding Section 151.360 to read as follows:

Sec. 151.360. CERTAIN STANDBY ELECTRIC POWER DEVICES.

(a) In this section, "standby electric power device" means a

non-portable device capable of supplying electric power to the

structure or facility at which it is permanently installed in the

event of a power grid outage.

(b) A device that has a rated capacity to supply less than

200 kilowatts that is purchased with the intent that it be

permanently installed and connected to the main electrical panel of

a structure or facility by a manual or automatic transfer switch for

use as a standby electric power device is exempt from the taxes

imposed by this chapter.

(c) The comptroller by rule shall prescribe the manner by

which a person who purchases a standby electric power device must

establish that the person is entitled to the exemption provided by

this section.

SECTION 2. Subchapter Z, Chapter 39, Utilities Code, is

amended by adding Section 39.9166 to read as follows:

Sec. 39.9166. AGGREGATED DISTRIBUTED GENERATION FACILITY

PROGRAM FOR DISPATCHABLE GENERATION. (a) In this section,

"customer-sited backup generation facility" means a distributed

generation facility in the ERCOT power region that is installed on a

retail electric customer's side of the meter:

(1) with a nameplate capacity of not more than 10

megawatts;

(2) that is capable of generating and providing backup

or supplementary power to the customer's premises and the power

grid; and

(3) that is capable of being dispatched by the

independent organization certified under Section 39.151 for the

ERCOT power region.

(b) This section does not apply to:

(1) a distributed natural gas generation facility

operated by a power generation company; or

(2) a distributed generation facility to which Section

35.037 applies.

(c) The commission shall establish an ancillary service

program to allow a retail electric provider, a municipally owned

utility that has not adopted customer choice, or an electric

cooperative that has not adopted customer choice to aggregate

customer-sited backup generation facilities to provide

dispatchable generation during a power grid outage if the

participation of the facilities in such a program is

technologically feasible.

(d) A retail electric provider, municipally owned utility,

or electric cooperative participating in the program shall provide

to the independent organization certified under Section 39.151 for

the ERCOT power region information about the facilities that the

independent organization determines is necessary for maintaining

system reliability.

(e) A customer that participates in the program is not

required to register as a power generation company solely because

of the person's participation in the program.

(f) The program may allow participating customers to sell

electric energy produced by customer-sited backup generation

facilities at:

(1) a value based on the clearing price of energy at

the time of day and at the location at which the electricity is

generated, including electric energy consumed on customer

premises; or

(2) another value as determined by the commission or

the independent organization certified under Section 39.151 for the

ERCOT power region.

(g) The sale may be applied as a credit to the customer's

account during a billing period that may be carried over to

subsequent billing periods until the credit has been redeemed.

(h) This section expires September 1, 2035.

SECTION 3. Section 151.360, Tax Code, as added by this Act,

does not affect tax liability accruing before the effective date of

this Act. That liability continues in effect as if Section 151.360,

Tax Code, had not been enacted, and the former law is continued in

effect for the collection of taxes due and for civil and criminal

enforcement of the liability for those taxes.

SECTION 4. This Act takes effect September 1, 2025.