SB 2994

relating to energy efficiency goals and programs.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1.  Section 39.905, Utilities Code, is amended by
amending Subsections (a), (b), (e), (f), (g), (h), (i), and (j) and
adding Subsections (a-1),(i-1), and (i-2) to read as follows:
(a)  [It is the goal of the legislature] The commission shal1
(1)  electric utilities will administer energy
efficiency incentive programs in a market-neutral,
nondiscriminatory manner but will not offer underlying competitive
(2)  all customers, in all customer classes, will have
a choice of and access to energy efficiency alternatives and other
choices from the market that allow each customer to reduce energy
consumption, summer and winter peak demand, summer and winter peak
(3)  each electric utility administers energy
(A)  cause the utility's portfolio of programs to
(B)  for an electric utility in an area of the
state not open to competition, include demand response programs;
(C)  acquire the following minimum quantifiable
reductions in demand annually from energy efficiency programs,
without the inclusion of demand reduction achieved through load
(i)  2,500 kilowatts for utilities with an average of less
than 300,000 total eligible residential and commercial customers in
(ii)  7,500 kilowatts for utilities with an
average of greater than 300,000 but less than 750,000 total
eligible residential and commercial customers in the previous five
(iii)  12,500 kilowatts for utilities with
an average of greater than 750,000 but less than 1.5 million total
eligible residential and commercial customers in the previous five
(iv)  37,500 kilowatts for utilities with an
average of greater than 1.5 million but less than 3 million total
eligible residential and commercial customers in the previous five
(v)  50,000 kilowatts for utilities with an
average of greater than 3 million but less than 5 million total
eligible residential and commercial customers in the previous five
(vi)  62,500 kilowatts for utilities with an
average of greater than 5 million total eligible residential and
commercial customers in the previous five years; and
(D)  acquire energy savings of no less than 75% of
what the utility achieved in energy savings in 2024 as previously
reported by the utility to the commission;
(E)  Beginning with the 2027 calendar year, the
goals in Subsections (a)(3)(C) and (a)(3)(D) shall increase by
three percent each year through 2028.  The commission shall update
the goals to set appropriate energy savings increases for years
(F)  For an electric utility in an area of the
state open to competition, the commission shall allow utilities to
claim energy savings and demand reduction from programs described
by PURA 39.919 (b) (9).  The commission shall adopt rules that
establish a deemed savings and avoided demand per device to be used
(4)  each electric utility annually provides, through
market-based standard offer programs or through targeted
market-transformation programs, incentives sufficient for retail
electric providers and competitive energy service providers to
acquire additional cost-effective energy efficiency, subject to
cost ceilings established by the commission, for the utility's
residential and commercial customers;[equivalent to:
[(i)  30 percent of the electric utility's annual growth in
demand of residential and commercial customers by December 31 of
each year beginning with the 2013 calendar year; and
[(ii)  the amount of energy efficiency to be
acquired for the utility's residential and commercial customers for
the most recent preceding year; and
[(B)  for an electric utility whose amount of
energy efficiency to be acquired under this subsection is
equivalent to at least four-tenths of one percent of the electric
utility's summer weather-adjusted peak demand for residential and
commercial customers in the previous calendar year, not less than:
[(i)  four-tenths of one percent of the
utility's summer weather-adjusted peak demand for residential and
commercial customers by December 31 of each subsequent year; and
[(ii)  the amount of energy efficiency to be
acquired for the utility's residential and commercial customers for
the most recent preceding year;]
(5)[(4)]  each electric utility in the ERCOT region
[shall] uses its best efforts to encourage and facilitate the
involvement of the region's retail electric providers in the
delivery of efficiency programs [and], demand response programs, or
both under this section, including programs for demand-side
[(A) use distributed renewable energy generation,
as defined by Section 39.916; or]
[(B)]reduce the need for energy consumption by
using a renewable energy technology, a geothermal technology [heat
pump], a solar water heater, or another natural mechanism of the
[(5)  retail electric providers in the ERCOT region,
and electric utilities outside of the ERCOT region, shall provide
customers with energy efficiency educational materials; and
[(6)  notwithstanding Subsection (a)(3), electric
utilities shall continue to make available, at 2007 funding and
participation levels, any load management standard offer programs
developed for industrial customers and implemented prior to May 1,
(a-1)  Utilities subject to Sections 39.9051 or 39.9052 are
not subject to the requirements of this section, although such
utilities may offer programs described by this section.
(b)  The commission shall provide oversight and adopt rules
and procedures to ensure that the utilities can achieve the goals
[goal] of this section, including:
(1)  establishing an energy efficiency cost recovery
factor for ensuring timely and reasonable cost recovery for utility
expenditures made to satisfy the goals [goal] of this section;
(2)  establishing an incentive under Section 36.204 to
reward utilities administering programs under this section that
exceed the minimum goals established by this section;
(3)  prohibiting an incentive achieved under this
section from being included in an electric utility's revenues or
net income for the purposes of establishing a utility's rates or the
utility's earnings monitoring report under Section 36.157, 36.210,
(4) [(3)]  providing a utility that is unable to
establish an energy efficiency cost recovery factor in a timely
manner due to a rate freeze with a mechanism to enable the utility
(A)  defer the costs of complying with this
(B)  recover the deferred costs through an energy
efficiency cost recovery factor on the expiration of the rate
(5) [(4)]  ensuring that the costs associated with
programs provided under this section and any shareholder incentive
[bonus] awarded are borne by the customer classes that receive the
(6)  establishing cost caps that:
(A)  allow electric utilities to meet the goals of
(i)  any shareholder incentive; and
(ii)  any third-party evaluation
measurement and verification costs;
(7) [(5)]  ensuring the program rules encourage the
value of the incentives to be passed on to the end-use customer;
(8) [(6)]  ensuring that programs are evaluated,
measured, and verified using a framework established by the
commission that promotes effective program design and consistent
(9) [(7)]  ensuring that an independent organization
certified under Section 39.151 allows load participation in all
energy markets for residential, commercial, and industrial
customer classes, either directly or through aggregators of retail
electric providers and aggregations as permitted by commission
rules or the independent organization, to the extent that load
participation by each of those customer classes complies with
reasonable requirements adopted by the organization relating to the
reliability and adequacy of the regional electric network and in a
manner that will increase market efficiency, competition, and
(e)  An electric utility may use money approved by the
commission for energy efficiency programs to perform necessary
energy efficiency research and development to foster continuous
improvement and innovation in the application of energy efficiency
technology and energy efficiency program design and
implementation.  Money the utility uses under this subsection may
not exceed 10 percent of the greater of:
(1)  the amount the commission approved for energy
efficiency programs in the utility's most recent [full rate]
proceeding in which an energy efficiency cost recovery factor is
(2)  the commission-approved expenditures by the
utility for energy efficiency in the previous year.
(f)  Each unbundled transmission and distribution utility
shall include in its energy efficiency plan a [targeted] low-income
energy efficiency program, and the savings achieved by the programs
shall count toward the transmission and distribution utility's
energy efficiency goal.  Electric utilities may participate in the
process enabled by Section 17.007 to validate customer eligibility.
The commission shall determine the appropriate level of funding to
be allocated to [both targeted and standard offer] low-income
energy efficiency programs in each unbundled transmission and
distribution utility service area.  The level of funding for
low-income energy efficiency programs shall be provided from money
approved by the commission for the transmission and distribution
utility's energy efficiency programs.  The commission shall ensure
that annual expenditures for the [targeted] low-income energy
efficiency programs of each unbundled transmission and
distribution utility are not less than [10] 15 percent of the
transmission and distribution utility's energy efficiency budget
for the year.  [A targeted low-income energy efficiency program
must comply with the same audit requirements that apply to federal
weatherization subrecipients.]  In an energy efficiency cost
recovery factor proceeding related to expenditures under this
subsection, the commission shall make findings of fact regarding
whether the utility meets requirements imposed under this
subsection.  [The state agency that administers the federal
weatherization assistance program shall participate in energy
efficiency cost recovery factor proceedings related to
expenditures under this subsection to ensure that targeted
low-income weatherization programs are consistent with federal
weatherization programs and adequately funded.]  Low-income
programs administered under this section do not have to meet
minimum cost-effectiveness standards but should be evaluated for
opportunities to improve cost-effectiveness while delivering
services to low-income customers.
(g)  The commission may provide for a good cause exemption to
a utility's liability for an administrative penalty or other
sanction if the utility fails to meet a goal for energy efficiency
under this section and the utility's failure to meet the goal is
caused by one or more factors outside of the utility's control,
(1)  limitations caused by the imposition of cost caps
on the energy efficiency cost recovery factor;
(2) [(1)]  insufficient demand [by retail electric
providers and competitive energy service providers] for program
incentive funds made available by the utility through its programs;
(3) [(2)]  changes in building energy codes; [and]
(4) [(3)]  changes in government-imposed appliance or
equipment efficiency standards[.]; and
(5)  interruptions in the supply chain.
(h)  For an electric utility operating in an area not open to
competition, the utility may achieve the goal of this section by:
(1)  providing rebate or incentive funds directly to
customers to promote or facilitate the success of programs
implemented under this section; or
(2)  developing, subject to commission approval, new
programs other than standard offer programs and market
transformation programs, provided [to the extent] that the new
programs do not render the portfolio of programs no longer
cost-effective [satisfy the same cost-effectiveness requirements
as standard offer programs and market transformation programs].
(i)  For an electric utility operating in an area open to
competition that provides [, on demonstration] to the commission a
notice and opportunity for hearing [, after a contested case
hearing,] that the requirements under Subsection (a) cannot be met
[in a rural area] through retail electric providers or competitive
energy service providers in hard-to-reach areas, the utility may
achieve the goal of this section by providing rebate or incentive
funds directly to customers in those areas [the rural area] to
promote or facilitate the success of programs implemented under
this section.  The electric utility must provide the notice to the
commission at least once every two years. For purposes of this
subsection, the commission shall adopt rules that define a
(i-1)  A person who contests an electric utility notice in a
hearing described by Subdivision (i) has the burden of proving to
the commission that the requirements of Subsection (a) can be met
through retail electric providers or competitive energy service
providers in hard-to-reach areas.
(i-2)  An electric utility described by Subdivision (i) may
receive information identifying low-income electric customers
under Section 17.007 (a).  Each electric utility that submits a
request to the commission to receive such information agrees to
reimburse the commission for the cost of the development of the
low-income electric customer matching service on terms agreed to by
the commission and the low-income electric customer list
administrator.  An electric utility that receives information
pursuant to this subsection may only use such information
implementing programs adopted under this section and is prohibited
from sharing or disclosing such information to affiliates or third
parties unrelated to these purposes.
(j)  An electric utility may use energy audit programs to
achieve the goal of this section if[:
[(1)  the programs do not constitute more than three
percent of total program costs under this section; and
[(2)]  the addition of the programs does not cause a
utility's portfolio of programs to no longer be cost-effective.
SECTION 2.  The Public Utility Commission of Texas shall
adopt rules to implement Section 39.905, Utilities Code, as amended
by this Act, not later than March 1, 202.
SECTION 3.  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, 2025.