The 2013 Texas State Legislative Session brought Property Assessed Clean Energy (PACE) to Texas. Remember that the Texas legislature only meets every other year. What will the 2015 Texas State Legislature do for solar power? Hear co-founder and executive director of Texas Renewable Energy Industries Association (TREIA) Russel Smith provide a summary of the past year’s out-of-session activity and a forecast of the actions expected from the 2015 Texas Legislative Session, then discover the potential impact on your business during a LIVE question-and-answer segment following Russel's presentation.

1. Principal Solar Institute
What’s in Store for Solar in the
2015 Texas Legislative Session?
Russel Smith, Executive Director TREIA
Russel Smith is the co-founder and executive director of Texas Renewable
Energy Industries Association (TREIA). His career spans more than three
decades working with governmental, educational and non-profit boards, and
on state committees promoting the development of solar wind, biomass,
geothermal and hydro resources. Smith is also a founding member and
former executive director of the educational non-profit Texas Solar Energy
Society.

2. Recent Legislative History
 In 2009, 2011, 2013 Legislative Sessions 40 TREIA supported
bills passed
 All 14 bills TREIA opposed were defeated
 Passed Bill Highlights:
 Positive adjustments to Chapter 313
 Higher education institutions may establish student fees to fund on
campus environmental and renewable energy projects
 Net metering required in El Paso Electric territory
 Significant restriction on HOA’s prohibition of solar
 Third party ownership of distributed renewable gen.
 Property Assessed Clean Energy allowed for commercial and industrial
facilities

3. Recent Legislative History, Cont’d…
 Defeated bill highlights:
 Several attempts to gut or eliminate Chapter 313
 Several attempts to restrict wind project development,
particularly on siting issues
 Attempts at unfavorable modifications of HOA law
 Efforts to repeal the state’s Goal for Renewable Energy
 Bill to repeal the CREZ law
 Elimination of the state’s Property Tax, Franchise Tax, and
Fuel Use Tax exemptions for renewables

4. Interim Changes
House Committee on Economic and Small
Business Development
 Review the current Texas Industry Cluster Initiative to
determine if the state's targeted industry clusters need to
be updated to reflect changes in industry sectors that have
evolved in Texas since the clusters were initially identified.
 Activity: No hearings held specifically addressing this
charge.

5. Interim Changes, Cont’d…
House Committee on Energy Resources
 “Study the impact of the expanding oil and gas exploration and
production occurring across the state. Included in the study should be
both the positive impacts of the exploration and production as well as
the new challenges they are presenting. The study should encompass
a review of the following issues:
• The effect on the state budget and Economic Stabilization Fund;
• The overall impact on the state economy;
• The impact on property values and local taxes;
• The effect on roads;
• The impact on local school districts;

6. Interim Changes, Cont’d…
House Committee on Energy Resources, Cont’d…
• The complex relationship between land owners, royalty owners,
and operators;
• The impact on the environment, including emissions and injection
wells;
• Projected water needs and how those fit with our state water plan;
and
• The housing issues created by the number of workers needed in
areas of shale plays.”
 Activity: Held three hearings (May, Aug. and Sept.) on oil & gas issues.

7. Interim Changes, Cont’d…
House Committee on Natural Resources
 Changes focused primarily on water issues including monitoring and
updates on implementation of water bills from 2013 session,
development of brackish water resources, enhanced aquifer storage,
and permitting
 Activity: Held two hearings (June) focused on implementation of 2013
water bill. No particular implications for renewables.

8. Interim Changes, Cont’d…
House Committee on Technology &
House Committee on Ways and Means
 Review state regulatory and tax policy to ensure that investment in
technology infrastructure, goods, and services is unfettered and that
Texas is able to capitalize on innovation to fuel additional job growth,
business expansion, and investment. (Joint charge.)
 Activity: Hearing held in Apr. with no particular implications for
renewables.

9. Interim Changes, Cont’d…
Senate Business & Commerce Committee
 Study initiatives taken by the Public Utility Commission of Texas (PUC)
to maintain the competitive retail electric market in the Electric
Reliability Commission of Texas (ERCOT) areas of operation.
 Monitor PUC discussions regarding resource adequacy to ensure any
decisions involve Texas-specific, free-market reforms.
 Consider options for enhancing the reliability of the ERCOT grid, as
well as multi-state grids outside ERCOT areas of operation in Texas.
 Study areas of innovation in the electric market in Texas, including
advancements in energy storage and efficient power dispatch to
support use of renewable power, and consider options to promote
their effective use in Texas.
 Activity: No hearings held directly on these issues.

10. Interim Changes, Cont’d…
Senate Committee on Natural Resources
 Study and make recommendations to encourage the use of brackish
water including but not limited to Aquifer Storage and Recovery and
Desalination.
 Activity: No hearings held directly on these issues.

11. Elections Matter
UT ENERGY POLL - SEPT. 2014
Age <35 65+
Most likely to vote for a candidate who supports:
- Reducing carbon emissions 68% 50%
- Natural gas export 41% 22%
- Imposing a carbon tax 43% 22%
- Expanding financial incentives for renewables 65% 48%
- Decreasing coal use 57% 33%
- Requiring utilities to obtain % of elec. from renewables 62% 48%
- Expanding natural gas development 56% 63%
Some polling showed fewer than 35% of those 35 or under planned to vote, and
greater than 60% of those over 60 planned to vote.

12. 84th Texas Legislature
Texas State Senate
As of Nov. 3 After Nov. 3
Democratic Party 12 11
Republican Party 18 20 (*19)
Vacancy 1 0 (*1)
TOTAL 31 31
Sen. Van de Putte (D) continues in Senate; Sen. Wendy Davis (D) gone,
Sen. Carona (R) and Sen. Deuell (R) chair, Eco. Dev. Comm., defeated in
primary; Sen. Robert Duncan (R) resigned; *Sen. Glenn Hegar (R) will
resign Dec. 5.

13. 84th Texas Legislature, Cont’d…
Texas House of Representatives
As of Nov. 3 After Nov. 3
Democratic Party 55 52 (*51)
Republican Party 94 98
Vacancy 1 0 (*1)
TOTAL 150 150
Rep. Strama (D) resigned; Rep. Eiland (R) , and Rep. Hilderbran (R) , who chaired
Ways & Means. chose not to run ; *Rep. Villareal (D) resigns Jan. 15 to run for
Mayor of San Antonio; Rep. Gallego (D) and Rep. Burnam (D) were defeated .

14. 84th Texas Legislature, Cont’d…
Lt. Governor Dan Patrick
Speaker of the House?
 Speaker Joe Straus (R) being challenged by
Rep. Scott Turner (R)

15. 84th Texas Legislature, Cont’d…
What can be expected from the upcoming session? State Rep.
Drew Darby of San Angelo is quoted as saying:
“There’s going to be an inherent conflict between campaign
rhetoric and actually getting something done. That will be the
challenge facing the 84th. Do I really think we’re going to get
anything done,” he asked rhetorically. “No,...we’ve got too
many new players, too many egos, too many agendas...but
I’m really hopeful that we can."

16. 84th Texas Legislature, Cont’d…
Important Legislative Calendar Dates:
November 10 - Prefiling of legislation began
January 13 - Session begins
March 13 - Filing deadline for most bills
June 1 - Last day of the session

17. Statewide Offices
All statewide elected officials are
Republican
All statewide elected officials will be new
All were elected with between 58% and
61% of the vote

18. Statewide Offices, Cont’s…
Governor Greg Abbott
Attorney General Ken Paxton
State Comptroller Glen Hegar
Land Commissioner George P. Bush
Agriculture Commissioner Sid Miller

19. Renewables Wish List
Protecting net-metering and requiring annual
reconciliation in El Paso
Expanding net-metering into other still regulated
regions
Statewide Annual Net Metering Policy
Sales tax exemption for solar and other customer-side
renewable energy devices (PV, solar water
heaters, geothermal heat pumps, small wind
generators)

20. Renewables Wish List, Cont’d…
Statewide solar rebate
Solar RPS which allows for REC payments to
third party financing companies
Pass legislation to prevent utilities from
assessing fees to renewable energy residential
and commercial owners
Require tiered rate structure for utilities and
cap or control high demand charges

21. Renewables Wish List, Cont’d…
Pass law encouraging Community Solar
Defend HOA law and fix loopholes
Make refinements to PACE law
Defend and/or improve Chapter 313
Defend against American Legislative Exchange
Council and other’s efforts to repeal or negatively
impact state’s Goal for Renewable Energy, CREZ,
Franchise Tax, Property Tax, and Fuel Use Tax
Exemptions

22. The Regulatory Front
 Modify “Power to Choose” web site to include “Distributed
Renewable Generation Excess Power Buy-back Programs.”
(May require legislation?)
 Promote increase in ERCOT tracking and reporting detail for
Distributed Renewable Generation installations in Proj.
42532 (Implementation of 3rd Party Ownership law)
 Stay engaged in Resource Adequacy process, Proj. 40000. (If
continues.)
 Energy Market, Capacity Market, or some hybrid approach
issue. (If re-engaged.)
 Engage in Proposed EPA Greenhouse Gas Rule Proj. 42636

23. The Regulatory Front, Cont’d…
 Monitor PUC development of “2015 Report on the Scope of
Competition in Electric Markets in Texas” (Project 42367)
which will include PUC Legislative Recommendations
Draft PUC Staff Legislative Recommendations
 Securitizing Utility Stranded Costs: “Because of the
magnitude of the EPA costs, the Legislature may want to
consider new laws that would permit vertically-integrated
utilities (companies outside of the ERCOT competitive
wholesale market) to use securitization as a means of
financing stranded costs resulting from compliance with
EPA regulations.”

24. Draft PUC Legislative Recommendations, Cont’d…
 CREZ Lines: “When the Commission is considering an
application for a transmission project intended to serve a
competitive renewable energy zone (CREZ), PURA § 39.904(h)
states that the Commission is not required to consider two
particular criteria for approval that are required of non-CREZ
transmission projects set forth in § 37.056(c)(1) and (2). The two
additional criteria are the adequacy of existing service, and the
need for additional service. This language may be construed to
prevent the Commission from deciding not to build additional
transmission to the CREZ zone should the PUC decide it is not
warranted. The Legislature could clarify that although the
Commission is not required to consider these two elements, the
Commission is authorized to consider them for both CREZ and
non CREZ transmission.”

25. Draft PUC Legislative Recommendations, Cont’d…
 CCNs for Muni. Utilities: “The Legislature could clarify PURA
37.051 and 37.052 to state that municipally owned utilities must, like
other electric utilities in Texas, receive a Commission-approved CCN
for the construction of transmission facilities outside their designated
retail service territory.”
 Natural Gas Goal: “Because natural gas has been the most
commonly built new generation for Texas for many years and it is
expected to continue to be, there is no need to establish incentives
for natural gas generation. The PUC recommends that the Legislature
consider repealing PURA §39.9044 because it is no longer necessary. “

26. Draft PUC Legislative Recommendations, Cont’d…
 Renewable Energy Goal: “PURA § 39.904 establishes goals for
renewable energy. Subsection (a) mandates the installation of 5,880
megawatts of renewable energy by 2015, and Subsection (b)
establishes a renewable energy credits trading program to implement
the mandate. The 5,880 megawatts mandate in Subsection (a) was
met in 2008. While the Commission believes the renewable energy
credits trading program is needed for retail electric providers to
validate renewable energy marketing claims, the Commission believes
the 5,880 megawatts mandate in Subsection (a) is no longer
necessary.”
 Complete draft recommendations available at:
http://interchange.puc.state.tx.us/WebApp/Interchange/Documents/42367_5_821406.PDF

27. Bills of Interest Filed To-Date
 SB 77 - Author: Ellis
Caption: Relating to the development of a climate adaptation plan by
certain entities. (Requires a climate adaptation plan every 4 years from the
Dept. of Ag., each entity certified as a “utility”, TCEQ, GLO, TDHCA, TDI,
TPWD, DPS, PUCT, Comptroller’s Office, Tx. A&M Forest Svc., and TWDB.)
 SB 78- Author: Ellis
Caption: Relating to the matters to be considered in developing the state
water plan. (Requires use of “best available science” in development of
state water plan on issues of use, availability, quality, future needs, etc.)

28. Bills of Interest Filed To-Date, Cont’d…
 HB 79 – Author: Guillen
Caption: Relating to exemptions from the sales and use tax and the
franchise tax for certain businesses during an initial period of operation in
the state. (10 yr. sales and franchise tax exemption establishing business in
counties of 250,00 or fewer in manufacturing or research, not substantially
similar in operation or ownership to another business in the state, and
creates at least one qualifying job within first 30 days.)
 HB 84 – Author: J. White
Caption: Relating to the exclusion of certain funds in determining total
revenue for purposes of the franchise tax by taxable entities engaged in
the business of harvesting trees for wood.

29. Bills of Interest Filed To-Date, Cont’d…
 HB 190 – Author: Burkett
Caption: Relating to the regulatory analysis of rules proposed
by the Texas Commission on Environmental Quality.
(Cost/Benefits Analysis for any proposed environmental rule.)
 HB 224 – Author: Guillen
Caption: Relating to the name and governance of the Railroad
Commission of Texas. (Name change to Texas Energy
Resources Commission.)

30. Principal Solar Institute
Russel E. Smith, 512-345-5446, rsmith@treia.org
Scott Kornfeld, 512-716-9012, skornfeld@treia.org
Not a member? Click “Join TREIA”
www.treia.org