HB 4577

relating to the reliability of the ERCOT power grid.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1.  Section 39.1591, Utilities Code, is amended to
Sec. 39.1591.  REPORT ON DISPATCHABLE AND NON-DISPATCHABLE
GENERATION FACILITIES.  Not later than December 1 of each year, the
commission shall file a report with the legislature that:
(A)  the estimated annual costs incurred by
load-serving entities and generation facilities under this
subchapter associated with backing up dispatchable and
non-dispatchable electric generation facilities to guarantee that
a firm amount of electric energy will be available to the ERCOT
(B)  as calculated by the independent system
operator, the cumulative annual costs that have been incurred in
the ERCOT market to facilitate the transmission of dispatchable and
non-dispatchable electricity to load and to interconnect
transmission level loads, including a statement of the total
cumulative annual costs and of the cumulative annual costs incurred
for each type of activity described by this paragraph; [and]
(2)  documents the status of the implementation of this
subchapter, including whether the rules and protocols adopted to
implement this subchapter have materially improved the
reliability, resilience, and transparency of the electricity
(3)  recommends any additional legislative measures
necessary to ensure that market signals are adequate to preserve
existing dispatchable generation and incentivize the construction
of new dispatchable generation capacity sufficient to meet the
reliability requirements adopted under Section 39.159 for at least
five years from the date of the report.
SECTION 2.  Section 39.1592, Utilities Code, is amended to
Sec. 39.1592.  GENERATION RELIABILITY REQUIREMENTS.  (a)
This section applies only to an electric generation facility in the
ERCOT power region that is subject to [for which] a standard
generator interconnection agreement, [ is signed on or after
January 1, 2027, that]has been in operation for at least one year,
and [that] is not a self-generator.
(a-1)  For the purposes of this section, a generation
facility is considered to be non-dispatchable if the facility's
output is controlled primarily by forces outside of human control.
(b)  Not later than December 1 of each year, an owner or
operator of a non-dispatchable [an electric] generation facility [,
other than a battery energy storage resource,] shall demonstrate to
the commission the ability of the facility to ensure that during at
least 95 hours of the highest 100 net load hours to occur in the next
calendar year the facility's hourly availability factor, as
determined under Subsection (b-1), will equal or exceed the
facility's expected availability factor, as determined under
(b-1)  The commission shall determine a non-dispatchable
generation facility's hourly availability factor by dividing the
facility's hourly average generation by the facility's installed
(b-2)  The commission shall determine a non-dispatchable
generation facility's expected availability factor by calculating
the average generation of the facility, divided by the facility's
installed capacity, during the highest 100 net load hours each
calendar year in an average of two or more immediately preceding
calendar years, [owner or operator's portfolio to operate or be
available to operate when called on for dispatch at or above the
seasonal average generation capability during the times of highest
reliability risk, as determined by the commission, due to low
operation reserves,] as determined by the commission.
(b-3)  The owner or operator may [must be allowed to] meet
the performance requirements described by this section
[subsection] only by operating, constructing, or acquiring
resources that are eligible to act as ancillary service reserves
according to the protocols of the independent organization
certified for the ERCOT power region under Section 39.151
[supplementing or contracting with on-site or off-site resources,
including battery energy storage resources.  The commission shall
determine the average generation capability based on expected
resource availability and seasonal-rated capacity on a standalone
(c)  The commission shall require the independent
organization certified under Section 39.151 for the ERCOT power
(1)  enforce the requirements of this section
[Subsection (b)] by imposing financial penalties, as determined by
the commission, for failing to comply with the performance
requirements described by this section [that subsection]; and
(2)  provide financial incentives, as determined by the
commission, for exceeding the performance requirements described
by this section [that subsection].
(d)  The independent organization certified under Section
39.151 for the ERCOT power region may not impose penalties under
(1)  for resource unavailability due to planned
maintenance outages or transmission outages; or
(2)  on resources that are already subject to
performance obligations [during the highest reliability risk
hours] under the day-ahead market rules or other ancillary or
reliability services established by the commission or the
[(3)  during hours outside a baseline established by
the commission that includes morning and evening ramping periods].
(e)  The commission by rule may establish an ancillary
service market or a separate reliability service to implement this
SECTION 3.  The owner or operator of a generation facility to
which Section 39.1592(b), Utilities Code, as amended by this Act,
applies shall make the first demonstration required by that section
not later than December 1, 2026.
SECTION 4.  This Act takes effect September 1, 2025.