According to the Legislative Budget Board (LBB), the bill increases the maximum administrative penalty for violations of Section 39.360 of the Utilities Code from $25,000 to $1,000,000 per offense. This substantial increase in potential fines could result in higher revenue collected by the state. However, the actual fiscal impact is uncertain as it depends on how many violations occur and the specific penalty amounts assessed in each case.

The bill does not mandate any significant new expenditures. It is assumed that relevant state agencies—including the Public Utility Commission, Office of the Attorney General, and others—can implement and enforce the bill's provisions using existing resources. Thus, any administrative or investigative responsibilities conferred by the bill are not expected to require additional appropriations or staffing, minimizing potential costs to the state.

As for local governments, no significant fiscal impact is anticipated. The bill's focus is on state-regulated electricity market participants and does not impose duties or costs on local governmental entities. Overall, SB 2368 represents a fiscal policy that strengthens regulatory oversight while generating potential penalty revenues without requiring substantial public expenditure.

SB 2368 represents a focused and necessary enhancement to the state’s efforts under the Lonestar Infrastructure Protection Act (LISPA), originally enacted in 2021. The legislation advances a targeted framework for safeguarding Texas’s critical electric grid infrastructure by addressing a specific vulnerability: the possibility of foreign-linked entities gaining market access through deceptive or insufficient disclosures. By increasing the administrative penalty for violations from $25,000 to $1 million per incident and granting broader investigative powers to both ERCOT and the Office of the Attorney General, the bill creates meaningful deterrents and enforcement tools without unduly expanding state bureaucracy.

The Committee Substitute also reflects a careful refinement of the original legislation, balancing security needs with industry practicality. For example, it removes the provision requiring background checks of prospective employees applying for grid-critical positions, thereby avoiding excessive administrative overhead while retaining a clear focus on organizational-level compliance. The bill also provides for immediate suspension or termination of market access if an entity is reasonably suspected of prohibited foreign affiliation—an essential power in the context of real-time grid management.

From a fiscal perspective, the bill could generate positive revenue for the state through increased administrative penalties, though the impact remains indeterminate due to the unpredictable frequency and severity of violations. At the same time, it imposes no significant fiscal burden on state agencies or local governments, as enforcement can be managed within existing resources​.

Overall, SB 2368 promotes limited but effective government oversight in a high-risk area, reinforces private sector responsibility, respects individual liberty by focusing only on corporate actors, and strengthens the state’s infrastructure protection framework—all in alignment with the principles of liberty and public safety. Therefore, Texas Policy Research recommends that lawmakers vote YES on SB 2368.

• Individual Liberty: The bill does not restrict individual freedoms or infringe on civil liberties. It applies specifically to business entities operating within ERCOT, not to private citizens. By helping prevent adversarial foreign control over critical infrastructure like the electric grid, it indirectly supports individual liberty by securing the foundational systems that enable Texans to live freely and safely.
• Personal Responsibility: The bill enhances accountability among market participants by imposing a substantial administrative penalty—up to $1 million—for submitting false or incomplete information about foreign affiliations. It also allows ERCOT to verify claims and report discrepancies to the Attorney General. These mechanisms promote a culture of honesty, integrity, and responsibility among entities operating in a high-stakes public utility space.
• Free Enterprise: While the bill introduces tighter oversight and restrictions on which entities may participate in the electricity market, these limits are narrowly tailored to exclude only those with connections to countries identified under the Lonestar Infrastructure Protection Act (China, Russia, North Korea, and Iran). This is a reasonable safeguard in a sector that has significant national security implications. The overall structure of a competitive, privately operated energy market remains intact, and the regulation serves to preserve—not hinder—trust in that marketplace.
• Private Property Rights: The bill does not alter or diminish private property rights. Businesses remain free to own, operate, and manage their property, but they must meet transparency and compliance standards when engaging in regulated market activities related to critical infrastructure. The provisions are directed at access and participation in a state-regulated market, not private ownership per se.
• Limited Government: The bill expands ERCOT’s authority to investigate and act upon suspicious foreign affiliations and authorizes the Attorney General to conduct follow-up investigations. While these are increases in regulatory power, they are narrowly scoped, clearly justified by security concerns, and include checks such as coordination between agencies. The bill does not introduce broad or unchecked authority and does not create new bureaucracies or impose costly mandates. It is a practical example of limited but purposeful government intervention in a vital public interest area.

• HB 131 (Similar To)