According to the Legislative Budget Board (LBB), HB 5623 is expected to result in a negative fiscal impact of approximately $4.9 million to General Revenue-related funds over the 2026–2027 biennium. This cost is primarily driven by the administrative expansion required to implement the new grant program under the Texas Energy Fund (TEF), contingent on voter approval of a constitutional amendment. While the bill itself does not appropriate funds, it establishes the legal foundation for such appropriations to be made by the Legislature in the future.

According to the Legislative Budget Board, the Public Utility Commission (PUC) would require three new full-time employees to manage the new grant program: one project manager and two grant specialists. These positions are projected to cost nearly $486,000 annually in salaries and benefits. Additionally, the PUC would need to amend existing contracts at a cost of $2 million per year to support the administration of the new grant program, based on similar costs for current TEF programs. The fiscal note also includes approximately $8,100 annually for equipment and technology needs, along with other minor operational costs.

An indirect fiscal impact noted is the potential reduction in interest earnings from the Texas Energy Fund itself. By authorizing greater disbursement for grants, the fund balance could decline, resulting in less interest income over time. However, the exact amount of such losses is indeterminate. Notably, no significant fiscal impact to local governments is anticipated under the current proposal.

HB 5623 proposes to expand the authority of the Public Utility Commission (PUC) to administer grants from the Texas Energy Fund for energy efficiency projects that benefit retail electric customers. While the objective of promoting energy efficiency and reducing electricity demand may seem prudent on the surface, the mechanism and scope of the bill raise significant policy and fiscal concerns that ultimately warrant a vote against the legislation.

First and foremost, the bill marks a substantial shift in the purpose of the Texas Energy Fund—from its original role of supporting electric generation infrastructure to funding consumer-focused, demand-side projects. This change in direction reallocates limited resources from system-level grid resiliency toward individual or localized efficiency upgrades. Such a reorientation risks diluting the fund’s primary focus on ensuring reliable electric supply, especially in the wake of past grid failures. Grid reliability requires investment in firm capacity and operational readiness, not just marginal reductions in usage. By opening the fund to a broader array of uses, HB 5623 potentially undermines the state's long-term resiliency posture.

Additionally, the bill relies solely on grant funding rather than loans, removing any expectation of financial return or accountability for public dollars spent. Grant programs, by their nature, are redistributive and often lack market-based feedback mechanisms. Without repayment or performance-based funding triggers, this structure increases the risk of waste, inefficiency, and favoritism. It also reduces the incentive for private individuals or organizations to make cost-justified investments in their own energy consumption decisions. Many energy efficiency upgrades, such as insulation or HVAC improvements, already produce long-term savings that justify private investment. When the state steps in with grant funding, it displaces private capital and weakens the ethic of personal responsibility.

From a fiscal perspective, the Legislative Budget Board has projected a recurring cost of nearly $2.46 million annually to the General Revenue Fund to administer the new program, with no corresponding revenue stream. The PUC would need to hire additional staff, amend contracts, and absorb operational and technology costs to execute the grant program. These administrative expenses represent a net outflow of public funds and divert agency focus from its core regulatory and oversight duties. Further, as disbursements from the Texas Energy Fund increase, the fund’s interest-earning potential will decline—another indirect cost to the state that is difficult to quantify but clearly present.

In terms of government scope, HB 5623 expands the role of the state in areas traditionally driven by private market dynamics. The energy efficiency services sector in Texas is well-established, competitive, and innovation-driven. By introducing state subsidies into this marketplace, the bill distorts competition and risks crowding out smaller firms or favoring politically connected recipients. This undermines the principle of free enterprise and opens the door to long-term government entanglement in sectors that should be governed by consumer choice and market efficiency.

Moreover, the bill lacks sufficient safeguards to prevent programmatic mission creep. The PUC is given broad rulemaking authority to determine eligibility criteria, leaving too much discretion to an unelected commission to shape how public money is distributed. There is no clear limit on the size or scope of eligible projects, no requirements for public transparency or reporting on outcomes, and no built-in mechanism to evaluate cost-effectiveness or ensure equitable access to funding. These structural gaps make the bill vulnerable to misuse, inefficiency, and policy drift over time.

In conclusion, while the goals of promoting energy conservation and reducing consumer costs are commendable, C.S.H.B. 5623 employs a top-down, publicly funded approach that expands government scope, creates new long-term spending commitments, and redirects funds away from critical grid reliability priorities. It fails to align with the core principles of limited government, fiscal responsibility, personal accountability, and free-market competition. For these reasons, Texas Policy Research recommends that lawmakers vote NO on HB 5623.

• Individual Liberty: While the bill does not impose mandates or restrictions on individuals, it nonetheless expands state influence into private energy decision-making. Participation in the grant program is voluntary, but the growing presence of government-backed financial incentives can shape market behavior in ways that reduce true consumer independence. When the state begins selectively funding projects for certain individuals or organizations, it indirectly guides private decision-making, reducing the organic freedom of choice that defines a free society. It also raises questions of fairness for individuals who do not qualify for, or choose not to participate in, government-supported programs.
• Personal Responsibility: The bill undermines the principle that individuals and businesses should bear the costs of their own energy decisions. Energy efficiency improvements often result in long-term savings and can be justified on their own merits. When the state steps in to offer grants, particularly non-repayable ones, it removes the incentive for individuals to weigh costs and benefits independently. This fosters dependency on public funds for actions that should arise from market-based reasoning and private initiative. It also distorts the signal that personal investment and accountability are prerequisites for long-term sustainability.
• Free Enterprise: This bill significantly encroaches on free market dynamics by introducing government subsidies into an active and competitive private sector. Texas has a robust market for energy services, including weatherization and demand-side management. By offering public grants to select entities, the bill creates unfair advantages, risks picking winners and losers, and may discourage private capital investment. Private firms may find themselves unable to compete with subsidized projects, which could lead to reduced innovation and market stagnation over time.
• Private Property Rights: The bill does not threaten or encroach upon private property rights in any direct sense. Property owners are not compelled to participate, nor does the bill include any eminent domain provisions or regulatory mandates. In fact, to the extent that the grants are used voluntarily to improve private property (e.g., upgrading insulation or installing more efficient systems), they could enhance the utility and value of property. However, if the program evolves to impose performance standards or de facto participation expectations, the neutrality of its impact on property rights could shift negatively over time.
• Limited Government: The bill significantly expands the scope of state government, both operationally and philosophically. It shifts the Texas Energy Fund from a narrowly focused tool for infrastructure resilience to a broader public subsidy program for consumer-facing upgrades. This not only increases government spending (via administrative overhead and grants) but also entrenches a new category of public-sector involvement into what has traditionally been a private-sector domain. The bill delegates broad authority to the Public Utility Commission to define rules and distribute funds, without clear limits or sunset provisions. This creates ongoing government entanglement in energy consumption behavior and spending priorities, directly conflicting with the principle of limited government.

• HJR 218 (Enabling for)