Texas legislature considers tougher permitting for renewables
Companion bills pending in Texas House and Senate committees would impose new permitting requirements for wind and solar projects, but not other types of power plants.
Anyone acquiring or financing a Texas project would be wise to address change-in-law risk in the deal documents.
The bills are among several proposals introduced this legislative session that would put new obstacles in the path of companies developing wind and solar projects in the state. Advocates believe such projects make the Texas power grid less reliable and, therefore, should face greater scrutiny.
The new permitting requirements, if enacted in the form they have been proposed, would apply to all existing, under construction and proposed solar and wind projects.
Such projects would have to get an environmental impact statement from the Texas Parks and Wildlife Department, comply with expanded public notice requirements, face increased risk of public exposure of commercially sensitive contracts, and pay higher fees.
The prospects are unpredictable. Some form of new permitting requirements has the support of Texas Lt. Governor Dan Patrick. The current Texas legislative session runs through May 29.
New Permitting Regime
Historically, Texas has maintained relatively relaxed permitting requirements for generating facility siting compared to other states. If House Bill 3707 and Senate Bill 624 pass, the permitting requirements would change the development landscape for wind and solar.
Permit applicants would be required to submit an environmental impact statement produced by the Texas Parks and Wildlife Department. The Public Utility Commission of Texas would flesh in the process and criteria that the Parks and Wildlife Department would have to follow when providing such statements.
Each project would be assigned an environmental impact score. The score would be determined based on a number of factors, including conservation of natural resources, ability to make continued use of the land on which a facility is located for agricultural and wildlife purposes, and whether the project interferes with agricultural best practices.
Environmental impact statements would not be required for fossil fuel power plants.
The new regulatory regime would apply to all wind and solar energy projects in the state, whether operating, under construction, or contemplated. Projects that are operating or that have begun construction prior to the effective date would be allowed to continue operations or construction while applying for the permit.
Imposition of these highly unusual retroactive requirements would create obvious issues for projects that are already financed and built or being built.
New Notice Obligations
The Public Utility Commission would provide notice to all property owners within a 25-mile radius of any solar or wind project that has applied for a permit. Any such property owner could then request a public hearing.
County judges of each county located within 25 miles of the boundary of any solar or wind project who ask in writing for notice of such projects must also be notified of any wind or solar project that is 15 megawatts or more in size.
Regardless of whether a public hearing is requested, the Public Utility Commission is prohibited from taking any action on the permit application for 30 days after notice is given.
Because documents filed with the Public Utility Commission can be may be made public, documents related to wind and solar projects, such as leases and power purchase agreements, may be made public to the extent they have been signed prior to the permitting process.
The bills would require the Public Utility Commission to ensure confidentiality of competitively sensitive information, but how confidentiality is to be protected is unspecified. Further, potential hearings and testimony might inadvertently expose aspects of confidential information to public disclosure.
If enacted, developers will have an incentive to get permits for projects before signing commercially sensitive contracts to avoid public disclosure.
The bills propose to establish a “Renewable Energy Generation Facility Clean Up Fund,” partially financed by an annual environmental impact fee imposed on permit holders.
The fee would be determined annually by the Public Utility Commission. The legislation specifies that the commission may consider factors such as a project's environmental impact score, size and efficiency, suggesting the annual fee will vary by project. There is no suggestion in the bills about the potential range in amounts.