By: Johnson  S.B. No. 2112          (In the Senate - Filed March 9, 2023; March 21, 2023, read   first time and referred to Committee on Business & Commerce;   April 18, 2023, reported adversely, with favorable Committee   Substitute by the following vote:  Yeas 10, Nays 0; April 18, 2023,   sent to printer.)Click here to see the committee vote     COMMITTEE SUBSTITUTE FOR S.B. No. 2112 By:  Johnson     A BILL TO BE ENTITLED   AN ACT     relating to resources used to ensure the continuous provision of   power.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Subchapter C, Chapter 382, Health and Safety   Code, is amended by adding Section 382.069 to read as follows:          Sec. 382.069.  TEXAS BACKUP POWER PACKAGE. (a) In this   section, "Texas backup power package" has the meaning assigned by   Section 418.401, Government Code.          (b)  The commission by rule shall adopt a process to expedite   the permitting of a Texas backup power package for which a permit is   required under this chapter.          SECTION 2.  Chapter 418, Government Code, is amended by   adding Subchapter K to read as follows:   SUBCHAPTER K. TEXAS POWER PROMISE          Sec. 418.401.  DEFINITIONS. In this subchapter:                (1)  "Fund" means the Texas power resiliency fund   established by Section 49-q, Article III, Texas Constitution.                (2)  "Texas backup power package" means a stand-alone,   behind-the-meter, multiday backup power source that can be used for   islanding.                (3)  "Trust company" means the Texas Treasury   Safekeeping Trust Company.          Sec. 418.402.  PURPOSE. The purpose of this subchapter is to   facilitate and provide funding for:                 (1)  the design, procurement, installation, and use of   Texas backup power packages for facilities on which communities   rely for health, safety, and well-being; and                (2)  the procurement and use of mobile sources of   backup power to ensure the health, safety, and well-being of   communities.          Sec. 418.403.  DIVISION DUTIES. (a) The division shall   convene an advisory committee in the manner provided by Chapter   2110, Government Code.          (b)  The advisory committee shall recommend criteria for the   division to employ in making a grant or loan under this subchapter.          (c)  The division shall contract with a research entity that   has experience in microgrid design to analyze critical facility   characteristics and requirements in this state and develop for   Texas backup power packages:                (1)  sets of specifications for standard backup power   packages of various sizes that can serve most critical facilities   in this state; and                (2)  specifications for standard interconnection,   communications, and controls for Texas backup power packages.          Sec. 418.404.  TEXAS BACKUP POWER PACKAGES. (a) A grant or   loan made under this subchapter may be provided only for the   operation of a Texas backup power package that:                (1)  is engineered to minimize operation costs;                (2)  uses interconnection technology and controls that   enable immediate islanding from the power grid and stand-alone   operation for the host facility;                (3)  is capable of operating for at least 48 continuous   hours without refueling or connecting to a separate power source;                (4)  is designed so that one or more Texas backup power   packages can be aggregated on-site to serve not more than 2.5   megawatts of load at the host facility;                (5)  provides power sourced from:                      (A)  a combination of natural gas or propane with   photovoltaic panels and battery storage; or                      (B)  battery storage on an electric school bus;   and                (6)  is not used by the owner or host facility for the   sale of energy or ancillary services.          (b)  Texas backup power packages may be aggregated and   operated to support the power grid under emergency conditions if   the operation does not compromise a Texas backup power package's   capability to provide power to its host facility for at least 24   hours of operation without refueling or connecting to a separate   power source.          Sec. 418.405.  GRANTS AND LOANS. (a) The division may   provide grants and loans under this subchapter.          (b)   The division by rule may establish procedures for:                (1)  the application for and award of a grant or loan   under this subchapter; and                (2)  the administration of the fund.          (c)  The amount of a grant provided under this subchapter may   not exceed $500 per kilowatt of capacity.          (d)  The division may provide a loan under this subchapter   for procurement and operating costs.          (e)  The division shall maintain and publish a list of   approved vendors eligible to assist with the sale, installation,   operation, and ongoing maintenance of Texas backup power packages.          (f)  The division may not provide a grant or loan under this   subchapter for:                (1)  a commercial energy system, a private school, or a   for-profit entity that does not directly serve public safety and   human health; or                (2)  a source of backup power that does not follow the   design and use standards of a Texas backup power package.          Sec. 418.406.  MOBILE BACKUP POWER FLEET. The division may   use money from the fund to procure and deploy mobile sources of   backup power to ensure the health, safety, and well-being of   communities.          Sec. 418.407.  FUND. (a) The Texas power resiliency fund is   a special fund in the state treasury outside the general revenue   fund to be administered and used, without further appropriation, by   the division.          (b)  The fund and the fund's accounts are kept and held by the   trust company for and in the name of the division.          (c)  Money deposited to the credit of the fund may be used   only as provided by this subchapter.          (d)  The fund consists of:                (1)  money credited, appropriated, or transferred to   the fund by the legislature;                (2)  revenue that the legislature dedicates for deposit   to the credit of the fund;                (3)  the returns received from the investment of money   in the fund; and                (4)  gifts, grants, and donations contributed to the   fund.          Sec. 418.408.  MANAGEMENT AND INVESTMENT OF FUND. (a) The   trust company shall hold and invest the fund, taking into account   the purposes for which money in the fund may be used. The fund may   be invested with the state treasury pool or pooled with other state   assets for purposes of investment.          (b)  The overall objective for the investment of the fund is   to maintain sufficient liquidity to meet the needs of the fund while   striving to preserve the purchasing power of the fund over a full   economic cycle.          (c)  In managing the assets of the fund, the trust company   may acquire, exchange, sell, supervise, manage, or retain any kind   of investment that a prudent investor, exercising reasonable care,   skill, and caution, would acquire or retain in light of the   purposes, terms, distribution requirements, and other   circumstances of the fund then prevailing, taking into   consideration the investment of all the assets of the fund rather   than a single investment.          (d)  The reasonable expenses of managing the fund shall be   paid from the fund.          (e)  The trust company annually shall provide a written   report to the division with respect to the investment of the fund.          (f)  The trust company shall adopt a written investment   policy that is appropriate for the fund. The trust company shall   present the investment policy to the investment advisory board   established under Section 404.028. The investment advisory board   shall submit to the trust company recommendations regarding the   policy.          (g)  The division annually shall provide to the trust company   a forecast of the cash flows into and out of the fund. The division   shall provide updates to the forecasts as appropriate to ensure   that the trust company is able to achieve the objective specified by   Subsection (b).          (h)  The trust company shall disburse money from the fund as   directed by the division.          SECTION 3.  Section 38.076, Utilities Code, is amended by   adding Subsection (c-1) to read as follows:          (c-1)  The commission shall require transmission and   distribution utilities to use good faith efforts to ensure that no   distribution feeder is subject to load shedding for more than four   consecutive hours in a six-hour period.          SECTION 4.  Subchapter D, Chapter 38, Utilities Code, is   amended by adding Section 38.078 to read as follows:          Sec. 38.078.  CIRCUIT SEGMENTATION STUDY AND COST RECOVERY.   (a) Not later than September 15, 2023, the commission shall direct   each transmission and distribution utility to perform a circuit   segmentation study.          (b)  A circuit segmentation study must:                (1)  use an engineering analysis to examine whether and   how the transmission and distribution utility's transmission and   distribution systems can be segmented and sectionalized to manage   and rotate outages more evenly across all customers and circuits,   while maintaining the protections offered to critical facilities;                (2)  include an engineering analysis of the feasibility   of using sectionalization, automated reclosers, and other   technology to break up the circuits that host significant numbers   of critical facilities into smaller segments for outage management   purposes to enable more granular and flexible outage management;                (3)  identify feeders with extensive numbers of   critical facilities that, if equipped with facility-specific   backup power systems and segmentation, can enhance the utility's   outage management flexibility; and                (4)  include an estimate of the time, capital cost, and   expected improvements to load-shed management associated with the   circuit segmentation study.          (c)  Each transmission and distribution utility shall submit   a report of the conclusions of the utility's study to the commission   not later than September 1, 2024.          (d)  The commission shall review each circuit segmentation   study not later than March 15, 2025.          (e)  If the commission determines that the implementation of   circuit segmentation engineering and investments as provided by a   transmission and distribution utility's circuit segmentation study   report would facilitate better outage management in the ERCOT power   region, investments made by the utility for such purposes shall be   presumed just, reasonable, and appropriate for rate-based cost   recovery.          SECTION 5.  Subchapter Z, Chapter 39, Utilities Code, is   amended by adding Section 39.919 to read as follows:          Sec. 39.919.  TEXAS BACKUP POWER PACKAGES. (a) In this   section, "Texas backup power package" has the meaning assigned by   Section 418.401, Government Code.          (b)  The commission by rule shall adopt procedures to   expedite electric cooperative, municipally owned utility, and   electric utility interconnection requests for Texas backup power   packages.          SECTION 6.  This Act takes effect on the date on which the   constitutional amendment proposed by the 88th Legislature, Regular   Session, 2023, providing for the creation of the Texas power   resiliency fund to finance backup power sources takes effect. If   that amendment is not approved by the voters, this Act has no   effect.     * * * * *