Johnson Energy Efficiency Bill Leaves Rulemaking Until March 2027

The text as introduced · 2,325 words

By: Johnson
S.B. No. 2994

A BILL TO BE ENTITLED

AN ACT

relating to energy efficiency goals and programs.

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

SECTION 1. Section 39.905, Utilities Code, is amended by

amending Subsections (a), (b), (e), (f), (g), (h), (i), and (j) and

adding Subsections (a-1),(i-1), and (i-2) to read as follows:

(a) [ It is the goal of the legislature ] The commission shal1

ensure that:

(1) electric utilities will administer energy

efficiency incentive programs in a market-neutral,

nondiscriminatory manner but will not offer underlying competitive

services;

(2) all customers, in all customer classes, will have

a choice of and access to energy efficiency alternatives and other

choices from the market that allow each customer to reduce energy

consumption, summer and winter peak demand, summer and winter peak

net demand, or energy costs;

(3) each electric utility administers energy

efficiency programs that:

(A) cause the utility's portfolio of programs to

be cost-effective;

(B) for an electric utility in an area of the

state not open to competition, include demand response programs;

(C) acquire the following minimum quantifiable

reductions in demand annually from energy efficiency programs,

without the inclusion of demand reduction achieved through load

management programs:

(i) 2,500 kilowatts for utilities with an average of less

than 300,000 total eligible residential and commercial customers in

the previous five years;

(ii) 7,500 kilowatts for utilities with an

average of greater than 300,000 but less than 750,000 total

eligible residential and commercial customers in the previous five

years;

(iii) 12,500 kilowatts for utilities with

an average of greater than 750,000 but less than 1.5 million total

eligible residential and commercial customers in the previous five

years;

(iv) 37,500 kilowatts for utilities with an

average of greater than 1.5 million but less than 3 million total

eligible residential and commercial customers in the previous five

years;

(v) 50,000 kilowatts for utilities with an

average of greater than 3 million but less than 5 million total

eligible residential and commercial customers in the previous five

years; or

(vi) 62,500 kilowatts for utilities with an

average of greater than 5 million total eligible residential and

commercial customers in the previous five years; and

(D) acquire energy savings of no less than 75% of

what the utility achieved in energy savings in 2024 as previously

reported by the utility to the commission;

(E) Beginning with the 2027 calendar year, the

goals in Subsections (a)(3)(C) and (a)(3)(D) shall increase by

three percent each year through 2028. The commission shall update

the goals to set appropriate energy savings increases for years

2028 and thereafter;

(F) For an electric utility in an area of the

state open to competition, the commission shall allow utilities to

claim energy savings and demand reduction from programs described

by PURA 39.919 (b) (9). The commission shall adopt rules that

establish a deemed savings and avoided demand per device to be used

for this purpose;

(4) each electric utility annually provides, through

market-based standard offer programs or through targeted

market-transformation programs, incentives sufficient for retail

electric providers and competitive energy service providers to

acquire additional cost-effective energy efficiency, subject to

cost ceilings established by the commission, for the utility's

residential and commercial customers ;[ equivalent to:

[ (A) not less than:

[ (i) 30 percent of the electric utility's annual growth in

demand of residential and commercial customers by December 31 of

each year beginning with the 2013 calendar year; and

[ (ii) the amount of energy efficiency to be

acquired for the utility's residential and commercial customers for

the most recent preceding year; and

[ (B) for an electric utility whose amount of

energy efficiency to be acquired under this subsection is

equivalent to at least four-tenths of one percent of the electric

utility's summer weather-adjusted peak demand for residential and

commercial customers in the previous calendar year, not less than:

[ (i) four-tenths of one percent of the

utility's summer weather-adjusted peak demand for residential and

commercial customers by December 31 of each subsequent year; and

[ (ii) the amount of energy efficiency to be

acquired for the utility's residential and commercial customers for

the most recent preceding year; ]

(5)[ (4) ] each electric utility in the ERCOT region

[ shall ] use s its best efforts to encourage and facilitate the

involvement of the region's retail electric providers in the

delivery of efficiency programs [ and ] , demand response programs , or

both under this section, including programs for demand-side

renewable energy systems that :

[ (A) use distributed renewable energy generation,

as defined by Section 39.916; or ]

[ (B) ]reduce the need for energy consumption by

using a renewable energy technology, a geothermal technology [ heat

pump ], a solar water heater, or another natural mechanism of the

environment ; .

[ (5) retail electric providers in the ERCOT region,

and electric utilities outside of the ERCOT region, shall provide

customers with energy efficiency educational materials; and

[ (6) notwithstanding Subsection (a)(3), electric

utilities shall continue to make available, at 2007 funding and

participation levels, any load management standard offer programs

developed for industrial customers and implemented prior to May 1,

2007 ].

(a-1) Utilities subject to Sections 39.9051 or 39.9052 are

not subject to the requirements of this section, although such

utilities may offer programs described by this section.

(b) The commission shall provide oversight and adopt rules

and procedures to ensure that the utilities can achieve the goals

[ goal ] of this section, including:

(1) establishing an energy efficiency cost recovery

factor for ensuring timely and reasonable cost recovery for utility

expenditures made to satisfy the goals [ goal ] of this section;

(2) establishing an incentive under Section 36.204 to

reward utilities administering programs under this section that

exceed the minimum goals established by this section;

(3) prohibiting an incentive achieved under this

section from being included in an electric utility's revenues or

net income for the purposes of establishing a utility's rates or the

utility's earnings monitoring report under Section 36.157, 36.210,

or 36.212;

(4) [ (3) ] providing a utility that is unable to

establish an energy efficiency cost recovery factor in a timely

manner due to a rate freeze with a mechanism to enable the utility

to:

(A) defer the costs of complying with this

section; and

(B) recover the deferred costs through an energy

efficiency cost recovery factor on the expiration of the rate

freeze period;

(5) [ (4) ] ensuring that the costs associated with

programs provided under this section and any shareholder incentive

[ bonus ] awarded are borne by the customer classes that receive the

services under the programs;

(6) establishing cost caps that:

(A) allow electric utilities to meet the goals of

this section; and

(B) exclude:

(i) any shareholder incentive; and

(ii) any third-party evaluation

measurement and verification costs;

(7) [ (5) ] ensuring the program rules encourage the

value of the incentives to be passed on to the end-use customer;

(8) [ (6) ] ensuring that programs are evaluated,

measured, and verified using a framework established by the

commission that promotes effective program design and consistent

and streamlined reporting; and

(9) [ (7) ] ensuring that an independent organization

certified under Section 39.151 allows load participation in all

energy markets for residential, commercial, and industrial

customer classes, either directly or through aggregators of retail

electric providers and aggregations as permitted by commission

rules or the independent organization, to the extent that load

participation by each of those customer classes complies with

reasonable requirements adopted by the organization relating to the

reliability and adequacy of the regional electric network and in a

manner that will increase market efficiency, competition, and

customer benefits.

(e) An electric utility may use money approved by the

commission for energy efficiency programs to perform necessary

energy efficiency research and development to foster continuous

improvement and innovation in the application of energy efficiency

technology and energy efficiency program design and

implementation. Money the utility uses under this subsection may

not exceed 10 percent of the greater of:

(1) the amount the commission approved for energy

efficiency programs in the utility's most recent [ full rate ]

proceeding in which an energy efficiency cost recovery factor is

set ; or

(2) the commission-approved expenditures by the

utility for energy efficiency in the previous year.

(f) Each unbundled transmission and distribution utility

shall include in its energy efficiency plan a [ targeted ] low-income

energy efficiency program, and the savings achieved by the programs

shall count toward the transmission and distribution utility's

energy efficiency goal. Electric utilities may participate in the

process enabled by Section 17.007 to validate customer eligibility.

The commission shall determine the appropriate level of funding to

be allocated to [ both targeted and standard offer ] low-income

energy efficiency programs in each unbundled transmission and

distribution utility service area. The level of funding for

low-income energy efficiency programs shall be provided from money

approved by the commission for the transmission and distribution

utility's energy efficiency programs. The commission shall ensure

that annual expenditures for the [ targeted ] low-income energy

efficiency programs of each unbundled transmission and

distribution utility are not less than [ 10 ] 15 percent of the

transmission and distribution utility's energy efficiency budget

for the year. [ A targeted low-income energy efficiency program

must comply with the same audit requirements that apply to federal

weatherization subrecipients. ] In an energy efficiency cost

recovery factor proceeding related to expenditures under this

subsection, the commission shall make findings of fact regarding

whether the utility meets requirements imposed under this

subsection. [ The state agency that administers the federal

weatherization assistance program shall participate in energy

efficiency cost recovery factor proceedings related to

expenditures under this subsection to ensure that targeted

low-income weatherization programs are consistent with federal

weatherization programs and adequately funded. ] Low-income

programs administered under this section do not have to meet

minimum cost-effectiveness standards but should be evaluated for

opportunities to improve cost-effectiveness while delivering

services to low-income customers.

(g) The commission may provide for a good cause exemption to

a utility's liability for an administrative penalty or other

sanction if the utility fails to meet a goal for energy efficiency

under this section and the utility's failure to meet the goal is

caused by one or more factors outside of the utility's control,

including:

(1) limitations caused by the imposition of cost caps

on the energy efficiency cost recovery factor;

(2) [ (1) ] insufficient demand [ by retail electric

providers and competitive energy service providers ] for program

incentive funds made available by the utility through its programs;

(3) [ (2) ] changes in building energy codes; [ and ]

(4) [ (3) ] changes in government-imposed appliance or

equipment efficiency standards[ . ] ; and

(5) interruptions in the supply chain.

(h) For an electric utility operating in an area not open to

competition, the utility may achieve the goal of this section by:

(1) providing rebate or incentive funds directly to

customers to promote or facilitate the success of programs

implemented under this section; or

(2) developing, subject to commission approval, new

programs other than standard offer programs and market

transformation programs, provided [ to the extent ] that the new

programs do not render the portfolio of programs no longer

cost-effective [ satisfy the same cost-effectiveness requirements

as standard offer programs and market transformation programs ].

(i) For an electric utility operating in an area open to

competition that provides [ , on demonstration ] to the commission a

notice and opportunity for hearing [ , after a contested case

hearing, ] that the requirements under Subsection (a) cannot be met

[ in a rural area ] through retail electric providers or competitive

energy service providers in hard-to-reach areas , the utility may

achieve the goal of this section by providing rebate or incentive

funds directly to customers in those areas [ the rural area ] to

promote or facilitate the success of programs implemented under

this section. The electric utility must provide the notice to the

commission at least once every two years. For purposes of this

subsection, the commission shall adopt rules that define a

hard-to-reach area.

(i-1) A person who contests an electric utility notice in a

hearing described by Subdivision (i) has the burden of proving to

the commission that the requirements of Subsection (a) can be met

through retail electric providers or competitive energy service

providers in hard-to-reach areas.

(i-2) An electric utility described by Subdivision (i) may

receive information identifying low-income electric customers

under Section 17.007 (a). Each electric utility that submits a

request to the commission to receive such information agrees to

reimburse the commission for the cost of the development of the

low-income electric customer matching service on terms agreed to by

the commission and the low-income electric customer list

administrator. An electric utility that receives information

pursuant to this subsection may only use such information

implementing programs adopted under this section and is prohibited

from sharing or disclosing such information to affiliates or third

parties unrelated to these purposes.

(j) An electric utility may use energy audit programs to

achieve the goal of this section if[ :

[ (1) the programs do not constitute more than three

percent of total program costs under this section; and

[ (2) ] the addition of the programs does not cause a

utility's portfolio of programs to no longer be cost-effective.

SECTION 2. The Public Utility Commission of Texas shall

adopt rules to implement Section 39.905, Utilities Code, as amended

by this Act, not later than March 1, 202.

SECTION 3. 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, 2025.