HB 2303

relating to electric market payments for and an exemption from
sales and use taxes for customer-sited distributed generation.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1.  Subchapter H, Chapter 151, Tax Code, is amended
by adding Section 151.360 to read as follows:
Sec. 151.360.  CERTAIN STANDBY ELECTRIC POWER DEVICES.
(a)  In this section, "standby electric power device" means a
non-portable device capable of supplying electric power to the
structure or facility at which it is permanently installed in the
(b)  A device that has a rated capacity to supply less than
200 kilowatts that is purchased with the intent that it be
permanently installed and connected to the main electrical panel of
a structure or facility by a manual or automatic transfer switch for
use as a standby electric power device is exempt from the taxes
(c)  The comptroller by rule shall prescribe the manner by
which a person who purchases a standby electric power device must
establish that the person is entitled to the exemption provided by
SECTION 2.  Subchapter Z, Chapter 39, Utilities Code, is
amended by adding Section 39.9166 to read as follows:
Sec. 39.9166.  AGGREGATED DISTRIBUTED GENERATION FACILITY
PROGRAM FOR DISPATCHABLE GENERATION.  (a)  In this section,
"customer-sited backup generation facility" means a distributed
generation facility in the ERCOT power region that is installed on a
retail electric customer's side of the meter:
(1)  with a nameplate capacity of not more than 10
(2)  that is capable of generating and providing backup
or supplementary power to the customer's premises and the power
(3)  that is capable of being dispatched by the
independent organization certified under Section 39.151 for the
(b)  This section does not apply to:
(1)  a distributed natural gas generation facility
operated by a power generation company; or
(2)  a distributed generation facility to which Section
(c)  The commission shall establish an ancillary service
program to allow a retail electric provider, a municipally owned
utility that has not adopted customer choice, or an electric
cooperative that has not adopted customer choice to aggregate
customer-sited backup generation facilities to provide
dispatchable generation during a power grid outage if the
participation of the facilities in such a program is
(d)  A retail electric provider, municipally owned utility,
or electric cooperative participating in the program shall provide
to the independent organization certified under Section 39.151 for
the ERCOT power region information about the facilities that the
independent organization determines is necessary for maintaining
(e)  A customer that participates in the program is not
required to register as a power generation company solely because
of the person's participation in the program.
(f)  The program may allow participating customers to sell
electric energy produced by customer-sited backup generation
(1)  a value based on the clearing price of energy at
the time of day and at the location at which the electricity is
generated, including electric energy consumed on customer
(2)  another value as determined by the commission or
the independent organization certified under Section 39.151 for the
(g)  The sale may be applied as a credit to the customer's
account during a billing period that may be carried over to
subsequent billing periods until the credit has been redeemed.
(h)  This section expires September 1, 2035.
SECTION 3.  Section 151.360, Tax Code, as added by this Act,
does not affect tax liability accruing before the effective date of
this Act.  That liability continues in effect as if Section 151.360,
Tax Code, had not been enacted, and the former law is continued in
effect for the collection of taxes due and for civil and criminal
enforcement of the liability for those taxes.
SECTION 4.  This Act takes effect September 1, 2025.