Although energy legislation does not seem to be a top priority of Texas Governor Greg Abbott during the current legislative session, at least two hostile bills have been introduced that threaten to increase burdens on renewable project developers and causing law firm K&L Gates to sound the alarm to its developers.

In these early days of the ongoing session, which began in mid-January and will continue until early June, NPM spoke with K&L Gates Government Affairs Advisor Austin McCarty on the two most concerning bills, SBs 819 and 714, currently on the floor and the ever-changing landscape of Texas politics during its lengthy legislative sessions.

Of the two bills, SB 819 is the more defined with clear similarities to a failed bill from the 2023 session, SB 624, that sought to increase permitting requirements and artificially raise costs on renewable energy developers in the state. While the impact of SB 819 would be less widespread as it would not apply to all existing projects in the state, it would apply to new projects coming only after September 1 or existing projects that undergo significant changes like capacity or site changes after that date.

McCarty notes this timeframe would likely even impact facilities currently under construction since projects are typically interconnected late in the construction phase. He also notes a regular ERCOT moratorium on transmission outages, which begins on May 15, would make it difficult for new projects to interconnect between the two dates.

McCarty also says the fact that, as currently written, the new “environmental reviews” all projects would be subject to would require the attention of the Texas PUC and likely bog down what is historically a significantly quicker interconnection process compared to other markets like MISO and PJM.

“The PUC is already very busy, so without additional resources it is hard to imagine this would not cause significant delays, especially for facilities trying to come online in the next few years,” McCarty said. “It would take the PUC several months to draft and adopt a rule to implement this legislation alone, and it’s hard to know if they would be able to do so before Sept. 1.

Beyond the new permitting requirements, SB 819 would also implement a nebulous “environmental impact fee” annually on renewable projects to go toward a new “renewable energy generation facility cleanup fund.” The size of this fee is undefined in the bill’s current language and, as of now, would also be determined by the PUC to project individually depending on factors like project scope and siting.

SB 719 also contemplates the addition of fees for projects that receive federal tax benefits through programs like the IRA but, as of now, those charges are also undefined. McCarty says the intent appears to be to “level the playing field” due to concerns raised by gas companies that argue wind and solar’s ability to offer energy into the market at negative pricing due to tax credits is unfair.

“The result would be higher energy prices for consumers,” McCarty said.

Finally, the new legislation would prohibit local bodies from tax exempting property used for renewable energy sites, which has already become less common in the state over the last two years after the demise of the chapter 313 tax abatement program that allowed developers to utilize tax abatements from local school districts.

McCarty notes Chapter 313’s replacement program Chapter 403 specifically outlaws’ abatements for “non dispatchable sources,” which he says will be “interesting to track regarding data centers, since that section of code was written long before the conversations around data centers and AI came to the forefront.”

“There is a potential for states with more of an all of the above strategy for energy generation to be more appealing for certain energy intensive companies,” McCarty said. “The main issue here is, by picking winners and losers on the generation side, lawmakers may be negatively impacting new employment opportunities for their constituents who could have been hired by companies that just want to keep the lights on regardless of where the power comes from.

Both SB 819 and 714 have been read and referred to the Senate Business and Commerce committees as of Feb. 7. On Feb. 13, SB 714 received co-author authorization, indicting lawmakers beyond the original authors have begun signing on to support it. SB 819 has yet to receive the same designation.

Regardless of whether either or both bills progress, McCarty notes it’s important to keep in mind that bills can change significantly through the legislative process and “sometimes the final bill looks nothing like the one that was introduced.” He also says despite the lack of energy legislation discussion in Governor Greg Abbott’s State of the State address in early February, “we know his staff is locked in on the topic.”

“The governor and legislators know another Winter Storm Uri cannot happen, so energy issues will remain a topic,” McCarty said.

Beyond SBs 819 and 714, McCarty says there are currently “dozens of bills” being filed related to the energy sector including policy proposals related to the establishment of a new Texas Advanced Nuclear Energy Authority, battery storage siting and offsets and something called the Lone Star Infrastructure Protection Act. Beyond this, he says other bills are still being filed.

“We still have several weeks before the bill filing deadline and our team has been involved as a resource for multiple legislators developing bills that are still to be filed,” McCarty said. “The important thing to consider about any energy bill is how they impact commercial and residential customers. If there is concern about reliable and sufficient energy to meet demand, now is not the time to put restrictions on sources of energy that are comparably cheap and quick to build.”

Finally, McCarty notes what he describes as the “highly dynamic environment around federal initiatives,” is leading to a lot of “wait-and-see from developers and state lawmakers” alike.

“The rapid-fire policy changes out of Washington D.C. have to be thoughtfully evaluated, which will lead to some adaptation of policy strategies at the state level,” McCarty said. “Timing is everything in a 140-day legislative session.”