HB4577 - Relating to the reliability of the ERCOT power grid.

      By: Harrison H.B. No. 4577       A BILL TO BE ENTITLED   AN ACT   relating to the reliability of the ERCOT power grid.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 39.1591, Utilities Code, is amended to   read as follows:          Sec. 39.1591.  REPORT ON DISPATCHABLE AND NON-DISPATCHABLE   GENERATION FACILITIES. Not later than December 1 of each year, the   commission shall file a report with the legislature that:                (1)  includes:                      (A)  the estimated annual costs incurred by   load-serving entities and generation facilities under this   subchapter associated with backing up dispatchable and   non-dispatchable electric generation facilities to guarantee that   a firm amount of electric energy will be available to the ERCOT   power grid; and                      (B)  as calculated by the independent system   operator, the cumulative annual costs that have been incurred in   the ERCOT market to facilitate the transmission of dispatchable and   non-dispatchable electricity to load and to interconnect   transmission level loads, including a statement of the total   cumulative annual costs and of the cumulative annual costs incurred   for each type of activity described by this paragraph; [ and ]                (2)  documents the status of the implementation of this   subchapter, including whether the rules and protocols adopted to   implement this subchapter have materially improved the   reliability, resilience, and transparency of the electricity   market ; and                 (3)     recommends any additional legislative measures   necessary to ensure that market signals are adequate to preserve   existing dispatchable generation and incentivize the construction   of new dispatchable generation capacity sufficient to meet the   reliability requirements adopted under Section 39.159 for at least   five years from the date of the report .          SECTION 2.  Section 39.1592, Utilities Code, is amended to   read as follows:          Sec. 39.1592.  GENERATION RELIABILITY REQUIREMENTS. (a)   This section applies only to an electric generation facility in the   ERCOT power region that is subject to [ for which ] a standard   generator interconnection agreement, [ is signed on or after   January 1, 2027, that ]has been in operation for at least one year,   and [ that ] is not a self-generator.           (a-1)     For the purposes of this section, a generation   facility is considered to be non-dispatchable if the facility's   output is controlled primarily by forces outside of human control.          (b)  Not later than December 1 of each year, an owner or   operator of a non-dispatchable [ an electric ] generation facility [ ,   other than a battery energy storage resource, ] shall demonstrate to   the commission the ability of the facility to ensure that during at   least 95 hours of the highest 100 net load hours to occur in the next   calendar year the facility's hourly availability factor, as   determined under Subsection (b-1), will equal or exceed the   facility's expected availability factor, as determined under   Subsection (b-2).           (b-1)     The commission shall determine a non-dispatchable   generation facility's hourly availability factor by dividing the   facility's hourly average generation by the facility's installed   capacity.           (b-2)     The commission shall determine a non-dispatchable   generation facility's expected availability factor by calculating   the average generation of the facility, divided by the facility's   installed capacity, during the highest 100 net load hours each   calendar year in an average of two or more immediately preceding   calendar years, [ owner or operator's portfolio to operate or be   available to operate when called on for dispatch at or above the   seasonal average generation capability during the times of highest   reliability risk, as determined by the commission, due to low   operation reserves, ] as determined by the commission.           (b-3)   The owner or operator may [ must be allowed to ] meet   the performance requirements described by this section   [ subsection ] only by operating, constructing, or acquiring   resources that are eligible to act as ancillary service reserves   according to the protocols of the independent organization   certified for the ERCOT power region under Section 39.151   [ supplementing or contracting with on-site or off-site resources,   including battery energy storage resources. The commission shall   determine the average generation capability based on expected   resource availability and seasonal-rated capacity on a standalone   basis ].          (c)  The commission shall require the independent   organization certified under Section 39.151 for the ERCOT power   region to:                (1)  enforce the requirements of this section   [ Subsection (b) ] by imposing financial penalties, as determined by   the commission, for failing to comply with the performance   requirements described by this section [ that subsection ]; and                (2)  provide financial incentives, as determined by the   commission, for exceeding the performance requirements described   by this section [ that subsection ].          (d)  The independent organization certified under Section   39.151 for the ERCOT power region may not impose penalties under   Subsection (c):                (1)  for resource unavailability due to planned   maintenance outages or transmission outages; or                (2)  on resources that are already subject to   performance obligations [ during the highest reliability risk   hours ] under the day-ahead market rules or other ancillary or   reliability services established by the commission or the   independent organization[ ; or                [ (3)     during hours outside a baseline established by   the commission that includes morning and evening ramping periods ].           (e)     The commission by rule may establish an ancillary   service market or a separate reliability service to implement this   section.          SECTION 3.  The owner or operator of a generation facility to   which Section 39.1592(b), Utilities Code, as amended by this Act,   applies shall make the first demonstration required by that section   not later than December 1, 2026.          SECTION 4.  This Act takes effect September 1, 2025.