Principal Solar Institute

Russel Smith, Executive Director TREIARussel Smith is the co-founder and executive director of Texas Renewable Energy Industries Association (TREIA). His career spans more than three decades working with governmental, educational and non-profit boards, and on state committees promoting the development of solar wind, biomass, geothermal and hydro resources. Smith is also a founding member and former executive director of the educational non-profit Texas Solar Energy Society.

What’s in Store for Solar in the

2015 Texas Legislative Session?

Recent Legislative History

In 2009, 2011, 2013 Legislative Sessions 40 TREIA supported bills passed

All 14 bills TREIA opposed were defeated

Passed Bill Highlights: Positive adjustments to Chapter 313

Higher education institutions may establish student fees to fund on campus environmental and renewable energy projects

Net metering required in El Paso Electric territory

Significant restriction on HOA’s prohibition of solar

Third party ownership of distributed renewable gen.

Property Assessed Clean Energy allowed for commercial and industrial facilities

Recent Legislative History, Cont’d…

Defeated bill highlights:

Several attempts to gut or eliminate Chapter 313

Several attempts to restrict wind project development, particularly on siting issues

Attempts at unfavorable modifications of HOA law

Efforts to repeal the state’s Goal for Renewable Energy

Bill to repeal the CREZ law

Elimination of the state’s Property Tax, Franchise Tax, and Fuel Use Tax exemptions for renewables

Interim Changes

House Committee on Economic and Small Business Development Review the current Texas Industry Cluster Initiative to

determine if the state's targeted industry clusters need to be updated to reflect changes in industry sectors that have evolved in Texas since the clusters were initially identified.

Activity: No hearings held specifically addressing this charge.

Interim Changes, Cont’d…

House Committee on Energy Resources “Study the impact of the expanding oil and gas exploration and

production occurring across the state. Included in the study should be both the positive impacts of the exploration and production as well as the new challenges they are presenting. The study should encompass a review of the following issues:

• The effect on the state budget and Economic Stabilization Fund;

• The overall impact on the state economy;

• The impact on property values and local taxes;

• The effect on roads;

• The impact on local school districts;

Interim Changes, Cont’d…

House Committee on Energy Resources, Cont’d…• The complex relationship between land owners, royalty owners,

and operators;

• The impact on the environment, including emissions and injection wells;

• Projected water needs and how those fit with our state water plan; and

• The housing issues created by the number of workers needed in areas of shale plays.”

Activity: Held three hearings (May, Aug. and Sept.) on oil & gas issues.

Interim Changes, Cont’d…

House Committee on Natural Resources

Changes focused primarily on water issues including monitoring and updates on implementation of water bills from 2013 session, development of brackish water resources, enhanced aquifer storage, and permitting

Activity: Held two hearings (June) focused on implementation of 2013 water bill. No particular implications for renewables.

Interim Changes, Cont’d…

House Committee on Technology &

House Committee on Ways and Means

Review state regulatory and tax policy to ensure that investment in technology infrastructure, goods, and services is unfettered and that Texas is able to capitalize on innovation to fuel additional job growth, business expansion, and investment. (Joint charge.)

Activity: Hearing held in Apr. with no particular implications for renewables.

Interim Changes, Cont’d…

Senate Business & Commerce Committee Study initiatives taken by the Public Utility Commission of Texas (PUC)

to maintain the competitive retail electric market in the Electric Reliability Commission of Texas (ERCOT) areas of operation.

Monitor PUC discussions regarding resource adequacy to ensure any decisions involve Texas-specific, free-market reforms.

Consider options for enhancing the reliability of the ERCOT grid, as well as multi-state grids outside ERCOT areas of operation in Texas.

Study areas of innovation in the electric market in Texas, including advancements in energy storage and efficient power dispatch to support use of renewable power, and consider options to promote their effective use in Texas.

Activity: No hearings held directly on these issues.

Interim Changes, Cont’d…

Senate Committee on Natural Resources Study and make recommendations to encourage the use of brackish

water including but not limited to Aquifer Storage and Recovery and Desalination.

Activity: No hearings held directly on these issues.

Elections Matter

UT ENERGY POLL - SEPT. 2014Age <35 65+

Most likely to vote for a candidate who supports:

- Reducing carbon emissions 68% 50%

- Natural gas export 41% 22%

- Imposing a carbon tax 43% 22%

- Expanding financial incentives for renewables 65% 48%

- Decreasing coal use 57% 33%

- Requiring utilities to obtain % of elec. from renewables 62% 48%

- Expanding natural gas development 56% 63%

Some polling showed fewer than 35% of those 35 or under planned to vote, and

greater than 60% of those over 60 planned to vote.

84th Texas Legislature

Texas State SenateAs of Nov. 3 After Nov. 3

Democratic Party 12 11

Republican Party 18 20 (*19)

Vacancy 1 0 (*1)

TOTAL 31 31

Sen. Van de Putte (D) continues in Senate; Sen. Wendy Davis (D) gone, Sen. Carona (R) and Sen. Deuell (R) chair, Eco. Dev. Comm., defeated in primary; Sen. Robert Duncan (R) resigned; *Sen. Glenn Hegar (R) will resign Dec. 5.

84th Texas Legislature, Cont’d…

Texas House of RepresentativesAs of Nov. 3 After Nov. 3

Democratic Party 55 52 (*51)

Republican Party 94 98

Vacancy 1 0 (*1)

TOTAL 150 150 Rep. Strama (D) resigned; Rep. Eiland (R) , and Rep. Hilderbran (R) , who chaired Ways & Means. chose not to run ; *Rep. Villareal (D) resigns Jan. 15 to run for Mayor of San Antonio; Rep. Gallego (D) and Rep. Burnam (D) were defeated .

84th Texas Legislature, Cont’d…

Lt. Governor Dan Patrick

Speaker of the House?

Speaker Joe Straus (R) being challenged by Rep. Scott Turner (R)

84th Texas Legislature, Cont’d…

What can be expected from the upcoming session? State Rep. Drew Darby of San Angelo is quoted as saying:

“There’s going to be an inherent conflict between campaign rhetoric and actually getting something done. That will be the challenge facing the 84th. Do I really think we’re going to get anything done,” he asked rhetorically. “No,...we’ve got too many new players, too many egos, too many agendas...but I’m really hopeful that we can."

84th Texas Legislature, Cont’d…

Important Legislative Calendar Dates:

November 10 - Prefiling of legislation began

January 13 - Session begins

March 13 - Filing deadline for most bills

June 1 - Last day of the session

Statewide Offices

All statewide elected officials are Republican

All statewide elected officials will be new

All were elected with between 58% and 61% of the vote

Statewide Offices, Cont’s…

Governor Greg Abbott

Attorney General Ken Paxton

State Comptroller Glen Hegar

Land Commissioner George P. Bush

Agriculture Commissioner Sid Miller

Renewables Wish List

Protecting net-metering and requiring annualreconciliation in El Paso

Expanding net-metering into other still regulated regions

Statewide Annual Net Metering Policy

Sales tax exemption for solar and other customer-side renewable energy devices (PV, solar water heaters, geothermal heat pumps, small wind generators)

Renewables Wish List, Cont’d…

Statewide solar rebate

Solar RPS which allows for REC payments to third party financing companies

Pass legislation to prevent utilities from assessing fees to renewable energy residential and commercial owners

Require tiered rate structure for utilities and cap or control high demand charges

Renewables Wish List, Cont’d…

Pass law encouraging Community Solar

Defend HOA law and fix loopholes

Make refinements to PACE law

Defend and/or improve Chapter 313

Defend against American Legislative Exchange Council and other’s efforts to repeal or negatively impact state’s Goal for Renewable Energy, CREZ, Franchise Tax, Property Tax, and Fuel Use Tax Exemptions

The Regulatory Front

Modify “Power to Choose” web site to include “Distributed Renewable Generation Excess Power Buy-back Programs.” (May require legislation?)

Promote increase in ERCOT tracking and reporting detail for Distributed Renewable Generation installations in Proj. 42532 (Implementation of 3rd Party Ownership law)

Stay engaged in Resource Adequacy process, Proj. 40000. (If continues.)

Energy Market, Capacity Market, or some hybrid approach issue. (If re-engaged.)

Engage in Proposed EPA Greenhouse Gas Rule Proj. 42636

The Regulatory Front, Cont’d…

Monitor PUC development of “2015 Report on the Scope of Competition in Electric Markets in Texas” (Project 42367) which will include PUC Legislative Recommendations

Draft PUC Staff Legislative Recommendations Securitizing Utility Stranded Costs: “Because of the

magnitude of the EPA costs, the Legislature may want to consider new laws that would permit vertically-integrated utilities (companies outside of the ERCOT competitive wholesale market) to use securitization as a means of financing stranded costs resulting from compliance with EPA regulations.”

Draft PUC Legislative Recommendations, Cont’d…

CREZ Lines: “When the Commission is considering an

application for a transmission project intended to serve a competitive renewable energy zone (CREZ), PURA § 39.904(h) states that the Commission is not required to consider two particular criteria for approval that are required of non-CREZ transmission projects set forth in § 37.056(c)(1) and (2). The two additional criteria are the adequacy of existing service, and the need for additional service. This language may be construed to prevent the Commission from deciding not to build additional transmission to the CREZ zone should the PUC decide it is not warranted. The Legislature could clarify that although the Commission is not required to consider these two elements, the Commission is authorized to consider them for both CREZ and non CREZ transmission.”

Draft PUC Legislative Recommendations, Cont’d…

CCNs for Muni. Utilities: “The Legislature could clarify PURA

37.051 and 37.052 to state that municipally owned utilities must, like other electric utilities in Texas, receive a Commission-approved CCN for the construction of transmission facilities outside their designated retail service territory.”

Natural Gas Goal: “Because natural gas has been the most

commonly built new generation for Texas for many years and it is expected to continue to be, there is no need to establish incentives for natural gas generation. The PUC recommends that the Legislature consider repealing PURA §39.9044 because it is no longer necessary. “

Draft PUC Legislative Recommendations, Cont’d…

Renewable Energy Goal: “PURA § 39.904 establishes goals for

renewable energy. Subsection (a) mandates the installation of 5,880 megawatts of renewable energy by 2015, and Subsection (b) establishes a renewable energy credits trading program to implement the mandate. The 5,880 megawatts mandate in Subsection (a) was met in 2008. While the Commission believes the renewable energy credits trading program is needed for retail electric providers to validate renewable energy marketing claims, the Commission believes the 5,880 megawatts mandate in Subsection (a) is no longer necessary.”

Complete draft recommendations available at:http://interchange.puc.state.tx.us/WebApp/Interchange/Documents/42367_5_821406.PDF

Bills of Interest Filed To-Date

SB 77 - Author: Ellis

Caption: Relating to the development of a climate adaptation plan by

certain entities. (Requires a climate adaptation plan every 4 years from the Dept. of Ag., each entity certified as a “utility”, TCEQ, GLO, TDHCA, TDI, TPWD, DPS, PUCT, Comptroller’s Office, Tx. A&M Forest Svc., and TWDB.)

SB 78- Author: Ellis

Caption: Relating to the matters to be considered in developing the state

water plan. (Requires use of “best available science” in development of state water plan on issues of use, availability, quality, future needs, etc.)

Bills of Interest Filed To-Date, Cont’d…

HB 79 – Author: GuillenCaption: Relating to exemptions from the sales and use tax and the franchise tax for certain businesses during an initial period of operation in the state. (10 yr. sales and franchise tax exemption establishing business in counties of 250,00 or fewer in manufacturing or research, not substantially similar in operation or ownership to another business in the state, and creates at least one qualifying job within first 30 days.)

HB 84 – Author: J. WhiteCaption: Relating to the exclusion of certain funds in determining total revenue for purposes of the franchise tax by taxable entities engaged in the business of harvesting trees for wood.

Bills of Interest Filed To-Date, Cont’d…

HB 190 – Author: Burkett

Caption: Relating to the regulatory analysis of rules proposed by the Texas Commission on Environmental Quality. (Cost/Benefits Analysis for any proposed environmental rule.)

HB 224 – Author: Guillen

Caption: Relating to the name and governance of the Railroad Commission of Texas. (Name change to Texas Energy Resources Commission.)

Principal Solar Institute

Russel E. Smith, 512-345-5446, rsmith@treia.org

Scott Kornfeld, 512-716-9012, skornfeld@treia.org

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