Current through Reg. 50, No. 13; March 28, 2025
(a)
Applicability. This section applies to a power generation company, municipally
owned utility, or electric cooperative that installs new generation capacity in
this state after January 1, 2000. The provisions of subsection (g) of this
section shall apply to a municipally owned utility or an electric cooperative
only if it has adopted customer choice pursuant to the Public Utility
Regulatory Act (PURA) §40.051(a) or §41.051(a) respectively. This
section does not apply to an electric utility not subject to PURA Chapter 39,
pursuant to §39.102(c), until the expiration of its freeze
period.
(b) Purpose. The purpose of
this section is to encourage, to the extent permitted by law, owners of new
generating capacity, other than capacity from renewable energy technologies, to
use natural gas as their primary fuel source. The commission shall institute a
natural gas energy credits trading program to ensure that 50% of all new
generating capacity except, capacity from renewable energy technologies,
installed in this state after January 1, 2000, uses natural gas as its primary
fuel.
(c) Definitions.
(1) New generating capacity - Nameplate
generating capacity of a facility installed in this state after January 1,
2000, except capacity based on a renewable energy technology. This definition
of new generating capacity does not include modifications to previously
installed generating facilities that merely increase the efficiency of, or
reduce emissions from, such facilities. For the purposes of this section the
phrase "new generating capacity purchased" refers to the purchase of all or
part of an installed unit, and not to the purchase of capacity or energy from
an installed unit.
(2) Natural gas
energy credit (NGEC) - A NGEC shall be granted for each megawatt of new
generating capacity fueled by natural gas. The commission shall issue NGECs to
each power generation company, municipally owned utility, or electric
cooperative that installs new, gas- fired generating capacity. Each credit
shall be issued once and shall be valid so long as the plant meets reasonable
performance standards; if a plant no longer meets reasonable performance
standards or is retired, its associated NGECs shall be revoked.
(3) Reasonable performance standards - Those
standards which, when applied to new natural gas-fired capacity, would
reasonably be expected to maximize energy output consistent with industry
standards widely accepted at the time of installation and for the technology
employed.
(d) Natural
gas energy credit requirement. Upon activation of the NGEC trading program the
number of NGECs required to be owned or held by each power generation company,
municipally owned utility, and electric cooperative in this state shall not be
less than its new non-gas-fired generating capacity in megawatts. Upon
retirement of new non-gas-fired generating capacity, the NGEC requirement shall
be reduced by the capacity of the facility that is retired.
(1) The requirements of this section may be
satisfied by owning new generating capacity fired primarily by natural gas, for
which NGECs have not been sold to a third party, or by holding NGECs acquired
from third parties, either in connection with purchasing capacity or on a
stand-alone basis, or by any combination thereof.
(2) A power generation company, municipally
owned utility, or electric cooperative that does not own new generation
capacity shall not be required to obtain any natural gas credits.
(e) Program activation. The
commission shall activate the natural gas energy credits trading program if it
determines that within three years from the date of the evaluation, new
generating capacity in Texas that is fueled primarily by natural gas may fall
below 55% of all new generating capacity. However, the commission may
accelerate or delay implementation of individual NGEC requirements in the event
the commission determines that such action is in the public interest. This
analysis shall be based on the annual reports filed pursuant to subsection (h)
of this section. If the commission activates the program, it shall:
(1) require power generators, municipally
owned utilities, and electric cooperatives to demonstrate that for each
megawatt of new non-gas fired generating capacity it owns or holds natural gas
energy credits equal to that amount of capacity; and
(2) Within 240 days, adopt rules that will
determine the conditions for compliance and penalties for noncompliance with
this section for each power generator, municipally owned utility, and electric
cooperative.
(f) Natural
gas energy credit trading. The commission shall be responsible for issuing,
tracking and assigning serial numbers to NGECs in accordance with this section.
The total number of NGECs at any time shall equal the amount of new gas-fired
generating capacity (MW) that uses natural gas as its primary fuel source, less
any NGECs revoked to reflect plant retirements or poor performance relative to
the standards referred to in subsection (c)(4) of this section. NGECs may be
traded among power generators, municipally owned utilities, electric
cooperatives, and other interested parties.
(g) Environmental benefits and "green"
electricity. Each retail electric provider, municipally owned utility, or
electric cooperative that has adopted customer choice:
(1) may emphasize that natural gas produced
in this state is the cleanest burning fossil fuel;
(2) may market electricity generated using
natural gas produced in this state as environmentally beneficial and may label
such generation as "green" electricity under this section if such electricity
is generated exclusively from generating capacity based on natural gas
technologies that use natural gas produced in this state. The use of fuel oil
in a generating facility that otherwise relies on natural gas as its sole fuel
shall not preclude labeling output from the facility as "green" if the fuel oil
is used for:
(C) a lubricant in de minimus amounts;
and
(3) shall provide
sufficient proof, upon request, that any marketing representation that it makes
that its electricity is "green" are consistent with this section.
(h) Annual reports.
(1) Beginning in 2001, no later than February
14th of each year, each registered power generation company, municipally owned
utility, and electric cooperative shall file with the commission on a form
prescribed by the commission, the following information regarding new
generating facilities it owns or operates in Texas:
(A) For each unit of new generating capacity:
(i) plant location and name;
(ii) nameplate capacity (in megawatts) of
each unit;
(iii) ownership share of
each unit;
(iv) primary fuel type
of new generating capacity;
(v)
Texas Natural Resource Conservation Commission turbine or boiler permit number
and date; and
(vi) date that
commercial operation began.
(B) Forecasted generation additions by fuel
type for the next three calendar years (for the next five calendar years if the
fuel type is coal, lignite, or nuclear):
(i)
plant location and name;
(ii)
nameplate capacity (MW) of each unit;
(iii) ownership share of each unit;
(iv) primary fuel type of new generating
capacity;
(v) Texas Natural
Resource Conservation Commission turbine or boiler permit number and date;
and
(vi) date that commercial
operation will begin.
(C) Data on holdings of natural energy gas
credits:
(i) current holdings of credits by
serial number; and
(ii) any
purchase or sale of credits by serial number during the previous calendar
year.
(2)
Based on the annual reports, not later that April 15th of each year, the
commission shall award NGECs for new-gas fired capacity installed in the
previous year.
(3) Beginning in
2001, and no later than May 15th of each year, the commission shall publish, in
aggregate form only, the information submitted in compliance with this rule,
including calculations that show whether the prior year's generating capacity
in Texas is in compliance with this section and whether capacity for the
following three years is likely to be in compliance with the natural gas usage
goals, based on the forecast information submitted.
(i) Texas natural gas - market conditions.
The commission shall consult with the Railroad Commission of Texas, which shall
monitor the Texas natural gas industry and conduct appropriate market studies
to determine whether an adequate supply of Texas natural gas for power
generation exists. If necessary, the commission shall develop additional
safeguards to ensure that natural gas produced in this state remains the
preferred fuel for power generation.
