According to the Legislative Budget Board (LBB), SB 1978 will have no significant fiscal impact on the State of Texas. The analysis assumes that any administrative or operational costs required to implement the bill’s provisions, such as evaluating interconnection applications or issuing determinations on public interest, can be absorbed by the Public Utility Commission (PUC) using its current resources and budgetary allocations.

The bill does not impose any new fees, create programs, or require infrastructure spending at the state level. Instead, it establishes additional regulatory review steps for entities seeking to interconnect ERCOT facilities with those outside the state. Since the PUC already conducts similar reviews for certificates of public convenience and necessity (CPCNs), the additional workload is not expected to be substantial enough to necessitate additional funding or staff.

Similarly, the bill is not expected to have a significant fiscal impact on local governments. It does not delegate enforcement or implementation responsibilities to municipalities or counties, and it does not create new regulatory obligations at the local level.

Overall, SB 1978 is a regulatory policy bill with limited budgetary consequences. It aims to preserve ERCOT’s regulatory independence through procedural safeguards, but it does so without creating a measurable financial burden on the state or its political subdivisions.

SB 1978 is a targeted and strategic measure to reinforce Texas’s long-standing policy of maintaining the independence of its electric grid through the Electric Reliability Council of Texas (ERCOT). The bill responds to growing concerns about potential federal encroachment on Texas’s unique regulatory status by creating a clear, structured process for evaluating any proposed interconnection between ERCOT and facilities located wholly or partly outside the state. A YES vote supports this statutory guardrail, affirming the legislature’s commitment to preserving grid sovereignty.

The bill ensures that any proposed interconnection will not subject ERCOT to expanded federal jurisdiction—particularly under the Federal Energy Regulatory Commission (FERC)—by requiring the Public Utility Commission of Texas (PUC) to make a “public interest” determination based on defined criteria, including technical feasibility, cost to the public, and reliability impacts. This step-by-step process prevents unintended consequences from cross-regional connections and guarantees that Texas retains the final say in whether interconnection aligns with the state’s regulatory and operational priorities.

While the bill introduces additional regulatory review, these procedures are narrow in scope, targeted specifically at interconnection proposals that could alter ERCOT’s legal status. The bill exempts existing interconnections approved prior to 2014 and grants the PUC authority to implement necessary rules for orderly administration. Importantly, the Legislative Budget Board has determined that the bill would have no significant fiscal impact on the state or local governments, indicating that its implementation can be absorbed with current agency resources and staffing.

Some concerns have been raised that the bill could limit private market activity or discourage innovation by utilities or co-ops. However, the legislation does not impose a ban on interconnection—it simply ensures that proposals are subjected to reasonable public interest scrutiny before potentially exposing the ERCOT grid to federal oversight. This is consistent with prudent infrastructure policy and reflects responsible stewardship of the state’s regulatory independence.

In sum, SB 1978 strikes an effective balance between market function and grid integrity, offering legal and procedural certainty while safeguarding Texas’s energy autonomy. As such, Texas Policy Research recommends that lawmakers vote YES on SB 1978.

• Individual Liberty: The bill protects Texans’ collective liberty by preserving the state’s authority over its own electric grid. By limiting interconnections that could expose ERCOT to federal regulatory jurisdiction, it ensures that Texas retains its unique ability to set its own energy policies—such as market design, reliability rules, and pricing structures—without federal mandates. This shields Texans from external decisions that might not reflect local preferences or conditions. While this is an aggregate liberty benefit, the bill does not significantly enhance individual decision-making rights for private actors.
• Personal Responsibility: The bill reinforces the idea that entities seeking to alter the structure of the grid (e.g., utilities or co-ops wishing to interconnect with outside systems) must take responsibility for the consequences of those actions. The bill requires applicants to justify interconnections through a public interest determination and to demonstrate that such actions will not subject ERCOT to increased federal regulation. This incentivizes thoughtful, deliberate behavior, consistent with the principle that those who initiate potentially disruptive changes should bear responsibility for the outcomes.
• Free Enterprise: The bill imposes a regulatory barrier on businesses (including electric cooperatives, utilities, and independent energy developers) by requiring state-level approval for certain grid interconnections. This can be seen as limiting free enterprise by constraining how private actors engage in cross-border energy markets. Even if the intention is to preserve Texas’s regulatory independence, the result is a more centralized gatekeeping role for the state, which can suppress innovation, infrastructure investment, and competition. Critics may view this as an instance where state protectionism undermines market dynamism.
• Private Property Rights: To the extent that the bill restricts how utilities and private landowners can use their property to support or participate in transmission infrastructure linked to out-of-state grids, it curtails freedom of use. For example, a landowner who wishes to host a transmission line that facilitates cross-state trade could face delays or denials under the bill’s expanded regulatory review. While not an outright violation of property rights, it places procedural and political hurdles on otherwise lawful, voluntary use of land for commercial energy purposes.
• Limited Government: The bill champions Limited Government in the federalist sense—it aims to prevent expansion of federal control over Texas’s grid, which is consistent with the principle of keeping governance close to the people. However, this protection is achieved through an expansion of state-level regulatory authority. The PUC is given more discretion to evaluate and approve or deny interconnection requests, which could be viewed as growing the state’s influence over private energy decisions. Thus, the bill limits federal government power while slightly expanding state oversight.