88R4503 CXP-F     By: Hughes S.B. No. 1050       A BILL TO BE ENTITLED   AN ACT   relating to the authority of a natural gas local distribution   company to offer energy conservation programs.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Chapter 104, Utilities Code, is amended by   adding Subchapter J to read as follows:   SUBCHAPTER J. NATURAL GAS ENERGY CONSERVATION PROGRAMS          Sec. 104.401.  DEFINITIONS. In this subchapter:                (1)  "Energy conservation program" means a program that   promotes energy conservation or energy efficiency.                (2)  "Local distribution company" means a gas utility   that operates a retail gas distribution system.          Sec. 104.402.  ENERGY CONSERVATION PROGRAM AUTHORITY. (a)   A local distribution company may offer to customers and prospective   customers and provide to customers an energy conservation program   in the manner provided by this subchapter.          (b)  The railroad commission has exclusive original   jurisdiction over energy conservation programs implemented by   local distribution companies.          (c)  A political subdivision served by a local distribution   company that implements an energy conservation program approved by   the railroad commission under this subchapter may not limit,   restrict, or otherwise prevent an eligible customer from   participating in the energy conservation program based on the type   or source of energy delivered to the customer.          Sec. 104.403.  ENERGY CONSERVATION PROGRAM COST RECOVERY.   (a) A local distribution company may recover costs prudently   incurred to implement one or more energy conservation programs if:                (1)  the company applies to the railroad commission at   least once every three years under this subchapter for review and   approval of the company's energy conservation programs; and                (2)  the railroad commission approves cost recovery for   the company's energy conservation programs.          (b)  The railroad commission by rule shall require a local   distribution company that implements an energy conservation   program under this subchapter to submit to the railroad commission   an annual report on:                (1)  the performance of the company's energy   conservation programs for the preceding year; and                (2)  the company's planned energy conservation programs   for the upcoming year.          (c)  An application submitted under Subsection (a) must   include:                (1)  a summary of and objectives for the local   distribution company's energy conservation programs;                (2)  a description of each program;                (3)  a proposed budget for each program; and                (4)  the projected consumption reduction or cost   savings for each program.          (d)  The railroad commission by rule shall:                (1)  determine a cost recovery mechanism for timely   recovery of all costs incurred in implementing an energy   conservation program, including:                      (A)  costs incurred to design, market, implement,   administer, and deliver an energy conservation program; and                      (B)  an amount equal to the reduction in the local   distribution company's marginal revenues due to the lower sales or   demand resulting from the energy conservation program; and                (2)  ensure that costs associated with an energy   conservation program are allocated to the customer classes eligible   for participation in the energy conservation program.          (e)  Energy conservation programs proposed under this   section may be combined in a portfolio to provide incentives and   services to encourage energy conservation. The portfolio:                (1)  must be designed to overcome barriers to the   adoption of energy-efficient equipment, technologies, and   processes and be designed to change customer behavior as necessary;   and                (2)  may include measures such as:                      (A)  direct financial incentives;                      (B)  technical assistance and information,   including building energy performance analyses performed by the   local distribution company or a third party approved by the   company;                      (C)  discounts or rebates for products; and                      (D)  weatherization for low-income customers.          (f)  A local distribution company may purchase carbon   offsets or credits to meet stated conservation objectives in the   company's energy conservation programs and is entitled to recover   the costs of the carbon offsets or credits through a purchased gas   adjustment for operational emissions or as a regulatory asset for   recovery in a future proceeding.          (g)  A proceeding filed under this section is not a   ratemaking proceeding for the purposes of Section 103.022.          (h)  A local distribution company implementing an energy   conservation program under this subchapter shall reimburse the   railroad commission for the utility's proportionate share of the   railroad commission's costs related to administration of reviewing   and approving or denying cost recovery applications under this   subchapter.          SECTION 2.  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, 2023.