By: King  S.B. No. 1075          (In the Senate - Filed February 21, 2023; March 3, 2023,   read first time and referred to Committee on Business & Commerce;   April 20, 2023, reported adversely, with favorable Committee   Substitute by the following vote:  Yeas 11, Nays 0; April 20, 2023,   sent to printer.)Click here to see the committee vote     COMMITTEE SUBSTITUTE FOR S.B. No. 1075 By:  King     A BILL TO BE ENTITLED   AN ACT     relating to facilities and construction machinery used to respond   to power outages.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 39.918, Utilities Code, is amended to   read as follows:          Sec. 39.918.  UTILITY FACILITIES FOR RESPONDING TO   SIGNIFICANT [POWER RESTORATION AFTER WIDESPREAD] POWER   OUTAGE.  (a)  In this section, "significant ["widespread] power   outage" means an event that [results in]:                (1)  results in a loss of electric power that:                      (A)  affects a significant number of distribution   customers of a transmission and distribution utility[;] and                      [(B)]  has lasted or is expected to last for at   least six [eight] hours;                      (B)  affects distribution customers of a   transmission and distribution utility in an area for which the   governor has issued a disaster or emergency declaration;                      (C)  affects distribution customers served by a   radial transmission or distribution facility, creates a risk to   public health or safety, and has lasted or is expected to last for   at least 12 hours; or                      (D)  creates [and                [(2)] a risk to public health or safety because it   affects a critical infrastructure facility that serves the public   such as a hospital, health care facility, law enforcement facility,   fire station, or water or wastewater facility; or                (2)  causes the independent system operator to order a   transmission and distribution utility to shed load.          (a-1)  The Texas Division of Emergency Management, the   independent organization certified under Section 39.151 for the   ERCOT power region, or the executive director of the commission may   determine that a power outage other than an outage described by   Subsection (a) is a significant power outage for the purposes of   this section.          (a-2)  A transmission and distribution utility is entitled   to determine whether a loss of electric power described by   Subsection (a)(1)(C) creates a risk to public health or safety for   the purposes of determining whether the loss event is a significant   power outage.          (b)  Notwithstanding any other provision of this subtitle, a   transmission and distribution utility may:                (1)  lease or own and operate facilities that provide   temporary emergency electric energy to aid in restoring power to   the utility's distribution customers during a significant   [widespread] power outage [in which:                      [(A)  the independent system operator has ordered   the utility to shed load; or                      [(B)  the utility's distribution facilities are   not being fully served by the bulk power system under normal   operations]; and                (2)  procure, own, and operate, or enter into a   cooperative agreement with other transmission and distribution   utilities to procure, own, and operate jointly, transmission and   distribution facilities that have a lead time of at least six months   and would aid in restoring power to the utility's distribution   customers following a significant [widespread] power outage.            (b-1)  In this section, long lead time facilities described   by Subsection (b) may not be electric energy storage equipment or   facilities described by [under] Chapter 35[, Utilities Code].          (c)  A transmission and distribution utility that [leases   and] operates a facility [facilities] under Subsection (b)(1) may   not sell electric energy or ancillary services from the facility   [those facilities].  As soon as reasonably practicable after the   utility deploys the facility, the utility shall provide written   notice to the commission and a written market notice to advise   competitive market participants of the details of the deployment.   Not later than the fifth business day after the date the deployment   ends, the utility shall file a report, in a form approved by the   commission, providing the details of the deployment, including the   start and end times of the deployment, the number of kilowatts or   megawatts deployed, the number of facilities used, the locations of   the facilities, and any other information required by the   commission.          (d)  A facility [Facilities] described by Subsection (b)(1):                (1)  must be operated in isolation from the bulk power   system; and                (2)  may not be included in independent system   operator:                      (A)  locational marginal pricing calculations;                      (B)  pricing; or                      (C)  reliability models.          (e)  A transmission and distribution utility that [leases   and] operates a facility [facilities] under Subsection (b)(1) shall   ensure, to the extent reasonably practicable, that retail customer   usage during operation of the facility [those facilities] is   adjusted out of the usage reported for billing purposes by the   retail customer's retail electric provider.          (f)  A transmission and distribution utility that decides to   lease a facility under Subsection (b)(1) shall, when reasonably   practicable, solicit [use a] competitive bids and consider any bids   received before leasing the facility [bidding process to lease   facilities under Subsection (b)(1)].          (g)  A transmission and distribution utility that leases or   owns and operates facilities under Subsection (b)(1) or that   procures, owns, and operates facilities under Subsection (b)(2)   shall include in the utility's emergency operations plan filed with   the commission, as described by Section 186.007, a detailed plan on   the utility's use of those facilities.          (h)  The commission shall allow [permit]:                (1)  a transmission and distribution utility that   leases or owns and operates facilities under Subsection (b)(1) to   recover the reasonable and necessary costs of leasing or owning and   operating the facilities, including the present value of future   payments required under a [the] lease, using the rate of return on   investment established in the commission's final order in the   utility's most recent base rate proceeding; and                (2)  a transmission and distribution utility that   procures, owns, and operates facilities under Subsection (b)(2) to   recover the reasonable and necessary costs of procuring, owning,   and operating the facilities, using the rate of return on   investment established in the commission's final order in the   utility's most recent base rate proceeding.          (i)  The commission shall authorize a transmission and   distribution utility to defer for recovery in a future ratemaking   proceeding the incremental operations and maintenance expenses and   the return, not otherwise recovered in a rate proceeding,   associated with the leasing, [or] procurement, ownership, and   operation of the facilities.          (j)  A transmission and distribution utility may request   recovery of the reasonable and necessary costs of leasing, [or]   procuring, owning, or [and] operating facilities under this   section, including any deferred expenses, through a proceeding   under Section 36.210 or in another ratemaking proceeding. The   commission may review costs recovered through a proceeding under   Section 36.210 in the following base rate proceeding and order   refunds to customers if appropriate.          (k)  A transmission and distribution utility requesting cost   recovery under Subsection (j) is entitled to select whether the   costs are considered to be distribution substation equipment costs   or distribution transformer costs unless the commission has found   in a previous base rate proceeding for the utility that temporary   emergency electric energy costs should be categorized in a   different manner.  The costs may not be considered transmission   costs. A lease under Subsection (b)(1) must be treated as a capital   lease or finance lease for ratemaking purposes.          (l)  The fact that the commission has not previously approved   a facility operated under this section or a cost of leasing,   procuring, owning, or operating a facility under this section is   not grounds for dismissal of the facility or the cost from a   proceeding under Section 36.210 or another ratemaking proceeding.          (m)  The total capacity of facilities a transmission and   distribution utility leases or owns and operates under Subsection   (b)(1) may not exceed three percent of the utility's historical   peak load.  Each transmission and distribution utility that leases   or owns and operates a facility under Subsection (b)(1) shall:                (1)  assess every four years the total capacity of   facilities needed to aid in restoring power during a significant   power outage, considering:                      (A)  the presence and frequency of extreme weather   conditions, including hurricanes, tornadoes, high winds,   lightning, flooding, icing, and freezes, in all or a portion of the   utility's certificated service area;                      (B)  the utility's current and planned system   hardening efforts;                      (C)  the utility's current and planned vegetation   management efforts;                      (D)  the utility's current and planned   expenditures on traditional distribution facilities;                       (E)  the utility's current and planned   expenditures on automation of its distribution system;                      (F)  the utility's allocated load shed obligation   based on historical seasonal peak demand, as determined by the   independent system operator;                      (G)  the presence or number of communities that   are remotely located or served radially in the utility's   certificated service area;                      (H)  the number or location of critical   infrastructure facilities that serve the public such as hospitals,   health care facilities, law enforcement facilities, fire stations,   and water or wastewater facilities in the utility's certificated   service area;                      (I)  the utility's emergency operations plan   filed with the commission; and                      (J)  other engineering or operational needs; and                (2)  submit to the commission the assessment under   Subdivision (1) for review.          (n)  The commission:                (1)  may:                      (A)  notwithstanding the total capacity   prescribed by Subsection (m), establish the capacity of facilities   that may be operated by a transmission and distribution utility in   aid of restoration for each type or category of significant power   outage, with the total capacity equal to or greater than three   percent of the utility's historical peak load;                      (B)  establish reasonable conditions on the   operation and use of facilities, including duration times and   prioritizing use to serve critical infrastructure facilities that   serve the public such as hospitals, health care facilities, law   enforcement facilities, fire stations, and water or wastewater   facilities; and                      (C)  require compliance with applicable law,   including any rule or order of the commission; and                (2)  shall establish a rebuttable presumption that the   facilities leased or owned and operated under Subsection (m) are   used and useful to the utility in providing service and the   utility's costs of leasing or owning and operating the facilities   are prudent, reasonable, necessary, and recoverable under Section   36.210 or in another ratemaking proceeding.          (o)  Notwithstanding Subsections (m) and (n), a transmission   and distribution utility may:                (1)  provide facilities to or use facilities from other   entities as part of a mutual assistance agreement during a   significant power outage; and                (2)  lease facilities on a short-term basis in response   to a significant power outage if:                      (A)  the significant power outage constitutes an   emergency and the utility determines that additional facilities are   necessary;                      (B)  the term of the lease is only for the duration   of that emergency;                      (C)  the utility notifies the commission of the   lease not later than the 30th day after the date of the lease   agreement; and                      (D)  the commission reviews the costs incurred by   the utility in a proceeding under Section 36.210 or in another   ratemaking proceeding.          [(k)  This section expires September 1, 2029.]          SECTION 2.  Section 502.146(b), Transportation Code, is   amended to read as follows:          (b)  An owner is not required to register a vehicle that is   used only temporarily on the highways if the vehicle is:                (1)  a farm trailer or farm semitrailer with a gross   weight of more than 4,000 pounds but not more than 34,000 pounds   that is  used exclusively:                      (A)  to transport seasonally harvested   agricultural products or livestock from the place of production to   the place of processing, market, or storage;                      (B)  to transport farm supplies from the place of   loading to the farm; or                      (C)  for the purpose of participating in equine   activities or attending livestock shows, as defined by Section   87.001, Civil Practice and Remedies Code;                (2)  machinery used exclusively for the purpose of   drilling water wells;                (3)  oil well servicing or drilling machinery and if at   the time of obtaining the license plates, the applicant submits   proof that the applicant has a permit under Section 623.142; or                (4)  construction machinery, including construction   machinery that is:                       (A)  owned by a transmission and distribution   utility as defined by Section 31.002, Utilities Code; and                      (B)  used to maintain or repair electrical lines   or substations in response to a power outage.          SECTION 3.  (a)  The changes in law made in Section 1 of this   Act apply only to a proceeding before the Public Utility Commission   of Texas or other regulatory authority described by Section 11.003,   Utilities Code, that commences on or after the effective date of   this Act. A proceeding before the Public Utility Commission of   Texas or other regulatory authority described by Section 11.003,   Utilities Code, that commenced before the effective date of this   Act is governed by the law in effect on the date the proceeding   commenced, and that law is continued in effect for that purpose.          (b)  The changes in law made in Section 1 of this Act apply   only to a contract or lease entered into or facilities procured on   or after the effective date of this Act.          SECTION 4.  To the extent of any conflict, this Act prevails   over another Act of the 88th Legislature, Regular Session, 2023,   relating to nonsubstantive additions to and corrections in enacted   codes.          SECTION 5.  This Act takes effect September 1, 2023.     * * * * *