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New Texas Legislative Energy Bills and Their Impact to the Industry

May 16, 2011

The 2011 Texas Legislative Session was well underway for quite some time now and there were various bills proposed and voted upon. Among these, three particular bills emerged that generated a significant stir among the players and concerned sectors in the Texas electricity and energy industry.

Why should these bills be of concern among Texas consumers? For one thing, these bills will have a significant influence on the way the state and its people generate, control and use Texas electricity and energy – which eventually would have far reaching impacts for Texas consumers in the near future.

Senate Bill 15 (Introduced by Sen. Troy Fraser)

Chairman Troy Fraser introduced this committee substitute for SB15 in the Senate Committee on Natural Resources that would create a Texas Energy Policy Council that will recommend new energy strategies for the state. The bill recognizes and emphasizes that using cost-effective, market-based solutions would be the preferred policy for Texas electricity and energy planning.

This proposed Energy Policy Council will have 11 members and will be consisted of representatives from the House, ERCOT, PUC, RRC, TCEQ, academic communities and the Senate. The team will be tasked with creating policies that will properly manage and utilize Texas-based energy resources to provide energy security, stability and reliability as well as promote energy system affordability, efficiency and flexibility.

The bill realizes that to meet the state’s growing electricity demand, it will have to adopt a strategy that will utilize all existing energy resources: coal, natural gas, nuclear, renewable energy and the construction of new Texas electricity plants. Texas will need at least 50,000 megawatts of new power generation to meet electricity and energy demands by the year 2030. Aside from that, given the people’s power to choose clean energy options, policies should also be established that will improve the state’s air quality and improve the quality of life for all residents in the near future and beyond.

Senate Bill 1590 (Introduced by Sen. Steve Ogden)

Faced with problems and issues on budgets shortfalls, this bill seeks to cap the state’s annual economic development investments such as the state’s spending on school property tax breaks – a primary tool used by local areas to attract investments for major business relocations and expansion projects which include wind farms for Texas electricity and new oil refineries.

The bill will give the comptroller the authority to decide which companies will qualify and receive tax benefits. Previously, local school trustees were the ones granting property tax breaks to these companies. These lost tax revenues are compensated by the state through increased state aid, which can go as high as $400 million. Senate Bill 1590 intends to cap this liability to $225 per year. Although the bill will reduce the state’s deficits, the business community argued that hindering Texas economic development will not be beneficial for the state in the long run.

House Bill 3328 (Introduced by Rep. Jim Keffer)

Called the Fracking Fluid Disclosure Bill, House Bill 3328 intends to put regulations requiring companies to provide disclosure of the concentration and volume of fluids and hazardous chemicals used in hydraulic fracturing as identified and regulated by the OSHA. This will provide information to the government, and the Texas public, regarding the potential impact of these fluids on the environment as well as their impact on human health.

The Texas electricity and energy industries seem to have no strong opposition to the bill, although industry representatives are making suggestions to avoid the disclosure of trade secrets. Aside from that, the industry is also asking that should drillers receive wrong information from the manufacturers of these fluids and chemicals, they should not be held liable.

Although environmentalist groups are pointing out that disclosure alone will not solve the environmental problems inherent in hydraulic fracking, most believe that the bill is a positive step for the people of Texas. It is a clear indication that the Texas electricity and energy industry, environmental groups, the government and the public can work hand-in-hand to ensure the safety of the people.

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