88R10513 JXC-F     By: Hernandez H.B. No. 3239       A BILL TO BE ENTITLED   AN ACT   relating to the participation of distributed energy resources in   the ERCOT ancillary services and wholesale energy markets.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 31.002, Utilities Code, is amended by   adding Subdivision (4-c) and amending Subdivisions (10) and (17) to   read as follows:                (4-c) "Distributed energy resource" means a resource   that:                      (A)  is capable of providing energy, providing   ancillary services, or providing both energy and ancillary   services;                      (B)  is operated in parallel with and is connected   to the distribution system at a voltage of less than 60 kilovolts;   and                      (C)  has an installed capacity of more than 100   kilowatts and less than 10 megawatts.                (10)  "Power generation company" means a person,   including a person who owns or operates a distributed natural gas   generation facility, that:                      (A)  generates electricity:                            (i)  that is intended to be sold at   wholesale, including the owner or operator of electric energy   storage equipment or facilities to which Subchapter E, Chapter 35,   applies; or                            (ii)  from a facility that is part of an   aggregated distributed energy resource or that is owned by a person   who is part of an aggregated distributed energy resource;                      (B)  does not own a transmission or distribution   facility in this state other than an essential interconnecting   facility, a facility not dedicated to public use, or a facility   otherwise excluded from the definition of "electric utility" under   this section; and                      (C)  does not have a certificated service area,   although its affiliated electric utility or transmission and   distribution utility may have a certificated service area.                (17)  "Retail electric provider" means a person that   sells electric energy to retail customers in this state. A retail   electric provider may not own or operate generation assets but may   aggregate distributed energy resources. The term does not include   a person not otherwise a retail electric provider who owns or   operates equipment used solely to provide electricity charging   service for consumption by an alternatively fueled vehicle, as   defined by Section 502.004, Transportation Code.          SECTION 2.  Section 39.351, Utilities Code, is amended by   amending Subsections (b) and (c) and adding Subsection (d) to read   as follows:          (b)  A power generation company shall comply with the   reliability standards adopted by an independent organization   certified by the commission to ensure the reliability of the   regional electrical network for a power region in which the power   generation company is generating or selling electricity and   aggregated distributed energy resources.          (c)  The commission may establish simplified filing   requirements for distributed natural gas generation facilities and   aggregated distributed energy resources.          (d)  Notwithstanding Subsection (a):                (1)  a facility or owner of a facility that is part of   an aggregated distributed energy resource, or a retail electric   provider that is involved in aggregating facilities as part of an   aggregated distributed energy resource, is not considered to be a   power generation company solely as a result of those activities;   and                (2)  a facility or owner of a facility that is part of   an aggregated distributed energy resource is not required to   register as a power generation company if the person who aggregates   the resources registers as a power generation company.          SECTION 3.  Subchapter Z, Chapter 39, Utilities Code, is   amended by adding Section 39.9166 to read as follows:          Sec. 39.9166.  PARTICIPATION OF DISTRIBUTED ENERGY   RESOURCES IN MARKET. (a) The commission may delegate authority to   the independent organization certified under Section 39.151 for the   ERCOT power region to enforce requirements adopted by the   commission under this section.          (b)  The commission by rule shall allow a person who owns or   operates a distributed energy resource or an aggregation of   distributed energy resources to participate in the ancillary   services and wholesale energy markets in the ERCOT power region if:                (1)  the owner or operator is registered as a power   generation company if required under Section 39.351 or is exempt   from registration under Section 39.916(k); and                (2)  the resource meets all requirements established by   the commission and the independent organization, including   electric utility specifications applicable under the   commission-approved tariff.          (c)  The commission by rule shall allow a person to aggregate   resources that are geographically linked to the same electric bus   or node so that the resources may be considered to be a single   distributed energy resource for the purposes of operations,   compliance, and participation in the ancillary services and   wholesale energy markets in the ERCOT power region. The commission   by rule shall direct the independent organization certified under   Section 39.151 for the ERCOT power region to enable aggregations   broader than a single electric bus or node when technically   feasible. In addition to any other applicable requirements,   aggregated distributed energy resources must:                (1)  demonstrate the ability to deploy energy,   ancillary services, or both at the direction of the independent   organization certified under Section 39.151 for the ERCOT power   region; and                 (2)  comply with applicable distribution system   reliability and market requirements.          (d)  In allowing for the participation of a person who owns   or operates a distributed energy resource or aggregation of   distributed energy resources under this section, the commission   shall adopt registration, qualification, interconnection,   telemetry, data submission, compliance, cost allocation, and other   appropriate requirements. The requirements:                 (1)  must ensure that:                      (A)  participation does not unduly affect the   security or reliability of the transmission and distribution   system; and                      (B)  the provision of ancillary services by a   distributed energy resource or aggregation of distributed energy   resources, to the extent technically necessary to the provision of   ancillary services, can be measured and verified separately from   any associated load;                (2)  may differ from requirements for a generation   resource that is not a distributed energy resource; and                (3)  must provide for energy production and consumption   at a single metering point to be accounted for and settled by the   independent organization certified under Section 39.151 for the   ERCOT power region to the distributed energy provider and the   retail electric provider in a manner that prevents double counting.          (e)  A retail electric provider may aggregate distributed   energy resources or assist in the aggregation of distributed energy   resources for a third party. The retail electric provider:                 (1)  is not:                       (A)  considered to be a power generation company   solely for that reason;                      (B)  required to register as a power generation   company; or                      (C)  exempt from Chapter 17, this chapter, or   commission rules relating to the aggregation; and                (2)  is responsible for ensuring the compliance of a   subcontractor, an agent, or any other entity compensated by the   retail electric provider for aggregation services.          (f)  Participation in an aggregated distributed energy   resource by a market participant or consumer is subject to the   commission's consumer protection rules, jurisdiction, and   authority under this title.          SECTION 4.  (a) The Public Utility Commission of Texas shall   adopt the rules required by Section 39.9166, Utilities Code, as   added by this Act, as soon as practicable after the effective date   of this Act to ensure that the requirements of Subsection (b) of   this section are met.          (b)  The Public Utility Commission of Texas shall allow the   participation as required by Section 39.9166, Utilities Code, as   added by this Act, not later than September 1, 2024.          (c)  The Public Utility Commission of Texas:                (1)  may operate a pilot program to allow the   participation described by Section 39.9166, Utilities Code, as   added by this Act, before September 1, 2024; and                (2)  before September 1, 2024, is not required to   modify a pilot program operated before the effective date of this   Act to allow the participation of distributed energy resources in   the ancillary services and wholesale energy markets in the ERCOT   power region.          SECTION 5.  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.