HB 280 implements the recommendations from the Texas Public Utilities Commission's 2008 report on energy efficiency.

Floor Debate

Rep. Anchia established a 'companion' relationship with Sen. Fraser's SB 546, which Anchia sponsored in the House Energy Resources Committee and substituted for his own bill.  This allowed the Senate bill to be eligible for consideration on the Floor en lieu of the House bill, effectively preparing the bill to go to the Governor's desk, if it passes 3rd reading and survives the conference committee process.

Two amendments were added to the bill on 2nd Reading on the House Floor.  Rep. Hartnet authored an amendment wich eliminated provisions related to the natural gas industry in the Utilities Code.

Rep. Swinford authored an amendment which allows undescribed "other programs" to be funded by the energy efficiency funds.

After Rep. Solomons offered an amendment to give tax breaks for certain types of appliances, Rep. Chisum attempted to kill the bill on a point of order- citing the bill violated the two subject rule.  Solomons quickly removed his amendment, and Anchia convinced Chisum to take back his point of order, effectively saving the bill.

The bill passed 2nd reading on a voice vote.

Analysis of Provisions

1.The bill increases the State's energy efficiency goals and change the metric to be a percentage of peak demand rather than a percentage of load growth.

The bill establishes annual efficiency goals of:
30% of annual growth in demand by January 1, 2012;.5% of peak demand by January 1, 2014;1% of peak demand by January 1, 2016; and 2% of peak demand by January 1, 2021.The bill maintains the current metric (using a percent of annual growth) for the first two years in order to give the PUC time to implement rules for the new metric recommended by the PUC report (percent of peak demand).

2.The bill includes cost caps to provide an additional layer of protection for Texas consumers.

Currently, the Texas energy efficiency programs are already subject to a cost-effectiveness test to ensure they are less than the cost of adding additional generation.This bill creates an explicit cost cap on the cost recovery factor that is passed on to the customer.  The cap is the lesser of $0.003 per kilowatt hour or the avoided cost per kilowatt hour of meeting that year's energy goal.

3.The bill provides the PUC with the authority to increase or decrease a utility's demand reduction goals based on its capacity to implement efficiency measures and demand response programs.

This addresses the issue that some smaller utilities have in certain parts of the state where the climate makes it more difficult to achieve efficiency goals (like El Paso Electric).

4.The bill provides for additional load management and demand response programs.

The programs should achieve cost savings for customers; ensure that residential elderly customers, customers with disabilities and low-income customers do not experience harmful health effects; and ensure that incentives are passed through to participating customers.The bill allows customers to participate in multiple load management or demand response programs at different intervals.The bill also codifies the 'capacity factor' which determines how much of a utility's peak demand goal is made up by energy savings.

5.The bill allows utilities to offer a cost-effective portfolio of energy efficiency rather than requiring each individual program to pass a cost-effectiveness test.

This allows utilities to offer individual programs at higher than avoided cost as long as their overall portfolio of energy efficiency programs is cost-effective.

This was also a recommendation from the PUC and would allow utilities to offer incentives for more expensive items that truly need them, such as solar, and things that are not technically cost effective, e.g., energy audits, as long as they were balanced out by other extremely cost-effective improvements in the portfolio

6.The bill establishes a program for providing incentives for Demand-side Renewable Generation (DRG).

The program would provide incentives equal to 70% of the avoided cost that results from implementing the DRG technology (solar, wind, geothermal, etc.).

Other state incentives for DRG may be used to reduce the amount available under this program.Geothermal heat pumps and solar water heaters are included in the definition of DRG.

7.The bill provides a process for continuing a market transformation pilot program for more than three years.

The pilot may be extended if the commission determines that the pilot program is an appropriate means of addressing special market barriers that prevent or inhibit the behavior addressed by the pilot program from being delivered through normal market channels, under a utility's standard offer program.

8.The bill encourages the ramp-up of energy efficiency programs so that they are more effective and reach all consumers.

The bill encourages programs to operate at sufficient scale to reduce the rate of free ridership, to ensure that all eligible customers have access to the programs and to allow retail electric providers and competitive service providers to mass market and deliver the programs to customers.

The bill also requires the PUC to establish standards for consumer disclosures by energy service companies that include the expected reduction of energy consumption, the anticipated payback period, and disclosure of any incentive received from the energy service provider from the state or federal government.

9.The bill encourages utilities to help build an infrastructure of efficiency professionals
Many efficiency programs are simply discontinued in the middle of a year when funding runs out.

Since it is hard to build a business around variable funding, the desired infrastructure has not developed.

This bill clarifies that building a base of stable efficiency contractors, such as energy auditors, is a goal of the State.

The bill also requires utilities to make their best efforts to ensure continuity in funding for market-based standard offer programs with proven demand.

10.The bill requires the PUC to develop different standards for program offerings in remote areas of the state and areas where demand for energy efficiency exceeds the local utility's capacity to provide them.

This provision would allow a utility to partner with local governments and community organizations to provide energy efficiency services.

11.The bill requires the PUC to establish, and each utility to implement, market-transformation incentive programs that encourage the use of new building technologies and construction practices.

This would enable utilities to receive credit for market transformation programs that encourage the exceeding building codes.

The bill also allows a utility to get credit for working with municipalities to establish building codes that promote greater energy efficiency than the minimum standards required by state or local law.

12.The bill creates an office of energy efficiency deployment in SECO to design and implement a statewide campaign to educate customers, utilities, and public entities about energy efficiency.

13.The bill provides a study on the issue of decoupling and energy efficiency credit trading.

The study will address the disincentives to the promotion of energy efficiency, including a utility's lost revenues from electricity sales and a utility's recovery of costs for programs promoting energy efficiency;The study will also include an analysis of the impact decoupling may have on low-income customers.