State Affairs

1 – HB9, relating to the development and funding of broadband and telecommunications services - Glenn Hegar

Glenn Hegar – Comptroller of public accounts, HB9

Discussion about three buckets of funds: Broadband Infrastructure Fund (BIF) ($1.5 billion), federal funds from the “Bringing Online Opportunities to Texas” funds (BOOT funds) ($500 million) needing to be expended by Dec 31 next year, and Broadband Equity Access and Deployment (BEAD) funds ($3.3 billion). Complexity in dealing with multiple federal partners like the US Treasury for BOOT fund and National Telecommunications Infrastructure Agency for BEAD funds. Importance of the $1.5 billion BIF fund for greater flexibility to match funds and expedite disbursement for the second round of boot funding. Emphasis on the 24 most critical counties in Texas with tight timelines to expend BOOT funding by December 31 next year. Challenges with mismatching state and federal statutes, with efforts in the last session to align them. Decision to match some BOOT funding with BIF funding to maximize funding distribution in critical counties and manage the entire state as BEAD funding becomes available next year. Addressing the growing pains in working with federal partners and the need for flexibility given Texas’s unique size and needs. Comptroller Glenn Hegar confirmed his neutral stance and the discussion was handed over to Gregory Conte.

Gregory Conte – Director of Broadband – Texas Comptroller – HB9

Director of the Comptroller’s broadband development office, testifying neutrally on HB9. Presented on the implementation of the Broadband Infrastructure Fund (BIF). The BIF was created through HB9 with $1.5 billion in general revenue. Completed a $155 million transfer to the Texas NextGen 911 system. Pending $75 million transfer to the broadband pole replacement fund. Outlined proposed uses for the remaining $1.3 billion to address the digital divide. Creation of a match program with state revenue for the federal BEAD program. Support for a second round of the broadband program (BOOT). Establishment of a middle-mile grant program. Targeting underserved locations for further grant funding. Investment in training opportunities to support labor force.

President & CEO Glenn Hamer – TX Association of Business – HB9

President and CEO of the Texas Association of Business, testifying neutrally on HB9. Highlighted importance of broadband for the state’s safety, job creation, and growth. Expressed support for continued investment to close the digital divide.

Q&A

Speaker: Representative Raymond Questioned the definition and selection of the 24 ‘critical counties’. Conte explained the selection based on digital divide severity using federal data. Discussed the difficulties and delays in the process, including federal challenges.

Speaker: Vice Chair Hernandez Inquired if mobile wireless coverage is included in the program. Greg Conte clarified the focus is on terrestrial fixed broadband.

Speaker: Representative Spiller Expressed concerns about the accuracy of state versus federal broadband maps. Conte explained the current use of federal maps and efforts to improve data accuracy. Discussed prevention of double-dipping by applicants seeking both federal and state funds.

Speaker: Glenn Hegar Outlined complications in overlapping federal and state programs. Confirmed prioritization of one program at a time to avoid funding duplications.

Speaker: Representative Slauson Requested identification of the 24 counties included in the NofA.

Speaker: Chairman Raymond Highlighted the need for future funding estimates to connect the whole state.

2 – HB2555, relating to transmission and distribution system resiliency planning by and cost recovery for electric utilities

Connie Corona – PUCT – HB2555

Connie Corona, Executive Director of the PUC, is testifying neutrally. HB2555 establishes procedures for utilities to submit plans to strengthen transmission and distribution systems’ resiliency. The Commission has 180 days to review, approve, modify, or deny the plans. The rule governing the submission and approval process took effect in February. Plans must demonstrate clear benefits to customers and strengthen systems against resiliency events like hurricanes. Three resiliency plans have already been filed by CenterPoint, Oncor, and Entergy. Filings are contested cases involving numerous intervenors including ERCOT, cities, and customer groups. These plans are complex, often up to 1000 pages. Commission Staff will recommend approval of plan elements that provide clear protection for Texans. Plans must be decided upon within 180 days of filing. CenterPoint’s plan is currently paused for reevaluation. An update on CenterPoint’s plan will be provided in the fall. Updates on Representative Metcalf’s letter regarding the Entergy case will be provided.

Woody Rickerson – ERCOT – HB2555

Woody Rickerson from ERCOT, testifying neutrally, explained that ERCOT’s role is to review resiliency plans from a transmission perspective and provide coordination if necessary.

Chris Ekoh – OPUC – HB2555

The review of resiliency plans focuses on the effectiveness of proposed measures to mitigate weather or security-related emergencies. There is no initial review process to assess prudence at the beginning stages of plan review. Customers bear the cost of the plans, regardless of whether they fail or succeed in mitigating the intended issue. A legislative fix is needed to allow cities or municipalities to review the prudence of these plans before implementation. High costs are involved in developing and implementing these resiliency measures. Current inability to assess whether the costs are justified or necessary before they are included in rates. Consumer benefits from these plans and accountability mechanisms for utilities are crucial aspects of the review.

Mark Bell – AECT – HB2555

Mark Bell, President of AECT, testified neutrally. Electric utilities in Texas are facing unprecedented challenges due to rapid growth and extreme weather events. HB2555, the Texas Resiliency Act, was introduced to help utilities develop and implement long-term resiliency plans. The Act was modeled after similar legislation in Florida and allows for investments in projects to improve grid resiliency. These projects include strengthening distribution facilities, undergrounding lines, lightning and flood mitigation, cybersecurity, vegetation management, and wildlife response. HB2555 aims to reduce costs and improve long-term infrastructure, benefiting consumers by potentially avoiding repetitive storm recovery costs. Utilities submit multi-year resiliency plans to the PUC for review and approval. Discussion on the transmission portion of the bill, which was removed in the final version, and potential utility in revisiting it later. Emphasis on the importance of the resiliency measures and ongoing support from PUC in reviewing submitted plans.

3 – HB5174, relating to the establishment and administration of the Texas Semiconductor Innovation Consortium

Executive Director Adriana Cruz – TX Economic Development & Tourism Office – HB5174

Adriana Cruz, Executive Director of the Texas Economic Development and Tourism Office, testifying neutrally. Larry Smith, Vice Chair of the Texas Semiconductor Innovation Consortium Executive Committee, accompanied Cruz. HB5174, signed into law by Governor Abbott in June 2023, established the Semiconductor Innovation Consortium, its executive committee, and the Texas Semiconductor Innovation Fund. A new division, the Texas Chip’s office within the Economic Development and Tourism Office, supports these entities. SB30 appropriated $698.3 million for the purposes defined in the act. The consortium is governed by a nine-member executive committee appointed by various state leaders and educational system chancellors. The consortium consists of designees from 19 Texas higher education institutions. The executive committee has met eight times since March 19 and established three subcommittees: scoring methodology for the Texas Semiconductor Innovation Fund, strategic planning, and executive director search. A statement of mission, goals, and objectives was adopted as the framework for the strategic plan. The Texas Semiconductor Innovation Fund provides matching funds to higher education institutions for semiconductor projects and awards grants to businesses for economic development. 29 applications for the Texas Semiconductor Innovation Fund were received and are under review. The executive committee recommended five grant applications totaling approximately $115.4 million, with one grant already approved and proceeding to contracting. The consortium is monitoring upcoming federal opportunities beneficial to Texas.

Jeremy Martin – Austin Chamber of Commerce – HB5174

Jeremy Martin, Austin Chamber of Commerce represents over 1700 businesses in Central Texas. Testified neutral Chamber supported the Texas Chips act during the 88th regular session. Texas has added about 60 new or expanded semiconductor manufacturing projects since 2020, half in central Texas. Samsung leads the growth with significant investments in Austin and Taylor campuses. Other key companies in the semiconductor industry in the region include Intel, Tokyo Electron, Silicon Labs, Infineon, NXP, and Applied Materials. More than $60 billion invested in Texas since the federal Chips act’s passage, with six projects expected to create over 8000 jobs. Emphasizes the importance of the Texas Semiconductor Innovation consortium considering the full spectrum of companies in the industry. Highlights the need to identify gaps in the federal Chips act, particularly in design intellectual property not covered by federal legislation. Sited Silicon Labs as an example of a company focused on design and intellectual property overlooked by the federal Chips act. Stressed the importance of including all companies involved from design to final product in the consortium’s consideration.

Glenn Hamer, CEO TAB – HB5174

Glenn Hamer, President and CEO of Texas Association of Business, neutral on HB5174 HB5174 complements, supplements, and covers gaps in federal legislation, specifically the federal Chips Act. Texas Legislature and Governor Abbott have aggressively leveraged federal funds for semiconductor industry support. Acknowledgement of leadership by Chairman Bonnan and Senator Huffman in advancing HB5174. Semiconductors’ crucial role in maintaining Texas’ leadership in investment and exports. Significant investments in Texas by companies like Samsung and Texas Instruments. Texas currently ranks number one in semiconductor exports. Research and advancements in semiconductor technology happening in Texas universities (UT Austin, Texas A&M). Commendation for the legislature’s holistic approach in legislation related to higher education (e.g., Jedi Act, HB8). Commendation for Governor Abbott and his team’s efforts in establishing international relationships to bolster Texas’ semiconductor industry. Questions raised by Representative Turner about federal investments in Texas facilities from the Chips and Science Act. Response by Adriana Cruz detailing federal investments: $6 billion for Samsung in Taylor, $400 million for Global Wafers in Sherman, $840 million DARPA grant for UT Texas Institute of Electronics. Confirmation that these events occurred within the past year. Transition to the utility preparedness section of the meeting, involving different panelists and a structured Q&A format.

4 – SB1699, relating to electricity service in the ERCOT power region, including the participation of aggregated distributed energy resources in the ERCOT market

Connie Corona, PUCT – SB1699

Connie Corona, Executive Director of PUCT testified neutrally on SB1699. Customer protections for the aggregate distributed energy resources (ADER) pilot program specified by SB1699. PUCT’s new energy efficiency division is operational with two out of three positions filled. Top priority is reviewing existing rules and implementing SB1699 requirements with input from nearly two dozen stakeholders. Phased approach to implementing complex rulemakings with anticipated completion of residential load reduction goals by December 1. Oncor’s smart thermostat program with incentives for retail electric providers to install smart thermostats is underway. Focus on collecting data to determine best practices for encouraging widespread deployment of smart thermostats. Overall goal is to benefit residential consumers by reducing energy usage and bills.

Woody Rickerson – ERCOT – on aggregated distributed energy resources – SB1699

Woody Rickerson discussed aggregated distributed energy resources (ADERS). PUC directed ERCOT to develop a pilot for ADERS participation in the wholesale market in July 2022. ADERS consist of multiple small sites aggregated to be dispatched as one large site. The pilot includes multiple phases, each building on the previous one. The phased approach minimizes changes to ERCOT and distribution service provider systems. The pilot has gathered valuable information for eventual rule and system changes. Currently, the pilot involves 13 total resources, with an additional 5 MW potentially joining. Printed details of phase one and phase two to be provided to the clerk.

Chris Ekoh – Office of Public Utility Counsel – SB1699

Testifying neutrally He praised the bill for focusing on customer benefits and potentially lowering customer bills and enhancing grid reliability. OPOC supports practical and cost-effective strategies for customer participation in energy efficiency programs. Highlighted collaboration with the commission’s new Energy Efficiency division. Stressed the impact on low income, hard-to-reach consumers, apartment renters, and individuals with medical conditions. Demand response and energy efficiency programs reviewed for residential consumer benefits. Actively involved in the ADR pilot program and planning to continue collaborating with ERCOT. Representative Turner asked about the bill’s status and mentioned an amendment for widespread demand response devices for residential participation. Clarified that the rule-making process for the demand response program has started and aims to be completed by December.

Sam Chang – CenterPoint Energy – SB1699

Sam Chang, Director and Associate General Counsel at CenterPoint Energy, testified neutrally. CenterPoint Energy’s involvement in Aggregate Distributed Energy Resources (ADER) was discussed. ADER is a virtual aggregation of small, consumer-owned distributed energy resources. ADER provides an additional solution along with dispatchable generation, transmission, energy efficiency, and demand side management. It allows customers to utilize their assets fully and supply energy to the grid during critical times. CenterPoint chaired the PUC’s ADER task force, contributing to the design and implementation of a pilot program for ADER participation in the ERCOT market. Currently, there are two ADERs participating in ERCOT, with about 13 MW on the