Meeting Summary - 05/22/2025 Senate Business & Commerce

▶️2 - HB3069 Darby - SP: Schwertner

• The chair introduced HB3069 and invited Senator Schwertner to explain the bill.
• The bill addresses expensive transmission congestion costs in the ERCOT system, estimated at nearly $2 billion last year.
• It focuses on long-term planning for transmission infrastructure in the ERCOT region.
• Proposes a supplemental multi-decade planning criteria for granting certificates for transmission projects.
• Criteria include evaluating potential customer savings using discount rates, hurdle rates, and scenario planning.
• The PUC findings would be part of the criteria in decision-making for certificates.
• HB3069 aims to ensure long-term cost savings for consumers, improve grid reliability, and support Texas’s growing energy needs.
• Three individuals were called for public testimony: Eddie Lucio, Katie Coleman, and Cyrus Reed.

▶️Eddie Lucio III, Texas Transmission Project - HB3069

• Eddie Lucio III represents the Texas Transmission Project, a coalition focused on transmission components and grid limitations.
• Acknowledgment of the stakeholders, including Miss Coleman, for their contributions in refining the bill.
• The bill aims to create a consensus by asking the Public Utility Commission to adopt alternative methods for issuing certificates.
• Out of 24 recently issued certificates, only two have been through economic planning.
• The bill seeks to provide a more robust alternative to the current system with discount factors and checks to avoid overemphasizing benefits.
• The focus is on making informed decisions regarding significant investments in necessary but costly state infrastructure.

▶️Cyrus Reed, Sierra Club - HB3069

• Cyrus Reed from the Lone Star Chapter of the Sierra Club discussed HB3069.
• Acknowledged the bill as a "great compromise", balancing transmission needs with consumer costs.
• Referred to Senator Hancock's previous bill, SB1281, which implemented an economic test for building transmission.
• Mentioned that the economic test is rarely used and targets savings over a three-year period.
• HB3069 introduces an alternative process to evaluate long-term benefits of transmission projects.
• Stressed that the bill requires a thorough process through ERCOT and PUC stakeholder engagement before implementation.
• The goal is to find projects that are economic and save consumers money, thus reducing congestion and costs on the ERCOT system.
• Expressed support for the compromise bill.

▶️Katie Coleman, TAM - HB3069

• Katie Coleman represented the Texas Association of Manufacturers and testified neutrally on HB3069.
• The Association negotiated the bill in the House and is comfortable with it.
• Previous concerns about the bill focused on evaluating future savings or benefits of transmission projects due to reliance on uncertain assumptions.
• The current version of the bill is neutral, allowing the PUC to determine discount rates and hurdle rates to assure customer benefits.
• Key factors in the long-term planning analysis include forecasting gas prices and generation locations, which are uncertain.
• The bill mandates the commission to evaluate whether benefits should exceed costs by a certain margin or if a discount rate should be applied to assumed benefits.
• Coleman concluded the testimony and opened the floor for questions.

▶️Senator Schwertner to Katie Coleman, HB3069 - Transmission Planning Criteria

• The bill addresses transmission costs over multiple decades, focusing on savings from relieving congestion versus building costs.
• The directive requires the PUC to establish a supplemental multi-decade transmission planning criterion.
• The previous congestion cost savings test is not included, but the bill supports long-term evaluation of transmission projects when approved by a CCN.
• Comparison between the previous test, which looked at the immediate few years after a project's implementation, and the new bill which evaluates long-term projections.
• The longer-term test will complement, not replace, the current near-term evaluation, providing more information for decision-making.
• The PUC will have the discretion to approve projects based on various methodologies.
• There will be a contested case at the PUC for need evaluation, allowing stakeholders to contest assumptions used in the tests.

▶️Senator Menéndez to Panel, HB3069 - Congestion Costs

• Senator Menéndez highlights the dramatic increase in congestion costs.
• Congestion costs nationwide jumped 56% in 2022, from $13 billion to $20 billion.
• Congestion costs occur when transmission capacity is insufficient to deliver low-cost energy.
• Manufacturers and consumers desire the lowest cost energy.
• Discussion on the importance of building infrastructure that is beneficial long-term.
• By 2031, Texas's energy load is expected to nearly double.
• Eddie Lucio II states that the current scarcity mindset in determining reliability is not sufficient for future demands.
• Texas is projected to become the seventh-largest economy in the world, necessitating future-focused infrastructure building.
• Acknowledgement of the need to maintain low costs for consumers while building necessary infrastructure.
• Public testimony on HB3069 has concluded and the bill remains pending.