A bill (H.B. No. 2860) introduced into the Texas legislature relating to distributed generation would prohibit certain fees charged by retail electric providers

The bill includes a new Section 39.1015 of the Utilities Code entitled "Consumer Protections For Certain On-Site Energy Generation And Storage."

"Distributed generation" is defined as electric generation with a capacity of not more than 2,000 kilowatts that is installed on a retail electric customer's side of the meter.

Notably, the bill provides that, "Except for a charge to recover a cost described by Subsection (e), an electric utility or a retail electric provider may not impose a rate or charge on a residential or small commercial customer or require a residential or small commercial customer to take service under a tariff or service plan that applies only to customers who have installed on-site distributed generation or energy storage resources."

The "cost described by Subsection (e)" above is any cost of an improvement to the distribution grid that must be made to allow the customer to install or expand existing on-site distributed generation or energy storage resources.

Furthermore, the bill provides, "An electric utility or a retail electric provider may not charge a residential or small commercial customer a fee solely because the customer elects to discontinue service from the utility or provider."

While this provision falls under the "Consumer Protections For Certain On-Site Energy Generation And Storage" section, nothing expressly limits the provision to customers with distributed generation, and the language could be read to prohibit early termination fees.

The prohibition on charging a fee for a customer discontinuing service would be part of new Section 39.1015 under Subchapter C, Chapter 39, Utilities Code, which addresses retail competition.

The bill also requires disclosures for the marketing of distributed generation leases and PPAs as follows:

A seller or lessor who enters into a purchase, lease, or power purchase agreement with a residential or small commercial customer for the operation of an on-site distributed generation resource shall provide to the customer in writing:

(1) contact information of the salesperson and installer of the generation resource;

(2) a description of the generation resource, including all associated equipment to be installed;

(3) the cost of the generation resource, including all associated equipment to be installed;

(4) a detailed accounting of fees associated with the installation or operation of the generation resource;

(5) representations made as part of the agreement regarding the expected operational performance and financial performance of the generation resource; and

(6) all applicable warranties.

In addition to the disclosures listed above, leases and PPAs each would have a unique set of additional disclosures, as follows:

A lessor shall provide to a leasing residential or small commercial customer in writing:

(1) the term and rate of the lease, including any payment escalators or other terms that affect the customer's payments; and

(2) a statement of whether the lease and any applicable warranty or maintenance agreement is transferable to the purchaser of the property where the on-site distributed generation resource is installed.

A residential or small commercial customer who enters into a power purchase agreement is entitled to receive in writing:

(1) the term and rate of the power purchase agreement, including any payment escalators or other terms that affect the customer's payments; and

(2) whether the power purchase agreement and any applicable warranty or maintenance agreement is transferable to the purchaser of the property where the on-site distributed generation resource is installed.