Overall Vote Recommendation

Vote No; Amend

Principle Criteria

Free Enterprise

Property Rights

Personal Responsibility

Limited Government

Individual Liberty

Digest

SB 6 focuses on electricity planning and infrastructure costs for large-load customers in Texas. It amends the Utilities Code to ensure that businesses requiring significant electricity usage contribute to the costs of interconnection with the transmission system. The bill establishes a cost-recovery mechanism, mandating that large energy consumers, particularly those exceeding 75 megawatts of demand, share in the expenses of upgrading and maintaining grid infrastructure. Additionally, municipal and cooperative utilities that have not adopted customer choice must pass these costs directly to such customers.

The legislation also introduces new planning requirements for large electricity loads in the ERCOT region. It directs the Public Utility Commission (PUC) to develop standards for interconnection to minimize stranded infrastructure costs while supporting business development in Texas. Large-load customers must disclose whether they are pursuing similar interconnection requests in other locations that could impact their commitment in Texas. These provisions aim to enhance grid reliability and ensure cost fairness while regulating large-scale electricity consumption.

The Committee Substitute for SB 6 refines the original filed version by narrowing its focus on large industrial electricity users while removing broad mandates that could have affected all retail customers. Initially, the bill proposed a minimum transmission charge for all retail customers, including behind-the-meter users, but the revised version limits cost recovery to large load customers directly interconnecting with the grid. Additionally, while both versions require large loads exceeding 75 megawatts to adhere to new planning standards, the committee substitute allows the Public Utility Commission (PUC) to adjust this threshold if necessary to prevent stranded infrastructure costs.

Other key changes include modifications to disclosure requirements, on-site backup power mandates, and financial commitments for large-load customers. The original bill required these customers to disclose other interconnection requests outside Texas, but the substitute clarified confidentiality provisions while allowing utilities to use limited information for planning. It also retains the requirement for large loads to report backup power capabilities but ensures compliance with environmental laws and provides flexibility in emergency response programs. Additionally, while both versions impose a $100,000 transmission study fee, the revised bill allows unused funds to be credited toward future interconnection costs, easing financial burdens.

Lastly, the substitute refines grid reliability provisions, including demand management services and transmission cost allocation studies. While both versions require new large loads to have remote disconnection capabilities, the substitute adds exemptions for critical industrial and gas facilities to prevent unintended service interruptions. The PUC's study on transmission cost allocation remains, but the revised version ensures that any changes must fairly distribute costs among utilities and customers. These refinements make the bill more business-friendly while maintaining its goal of ensuring grid reliability and cost accountability.

Author

Phil King

Charles Schwertner

Co-Author

Carol Alvarado

Cesar Blanco

Donna Campbell

Brandon Creighton

Sarah Eckhardt

Brent Hagenbuch

Bryan Hughes

Mayes Middleton

Sponsor

Ken King

Contact the Author

Sen. Phil King

Capitol Phone:

(512) 463-0110

Capitol Office:

CAP GE.5

E-Mail:

[email protected]

Visit Official Website

Fiscal Notes

The fiscal impact of SB 6 is projected to be $2.64 million in costs to the General Revenue Fund over the 2026-2027 biennium, with an annual cost of $1.32 million thereafter. The bill does not appropriate funds directly but establishes the legal framework for potential appropriations. The Public Utility Commission of Texas (PUC) will require nine additional full-time employees to implement the bill’s regulatory measures, including rulemaking, rate regulation, and market analysis. Additional IT costs of $24,300 per year are anticipated to support these new responsibilities.

Municipally owned utilities and electric cooperatives may face higher costs due to the bill’s requirements for minimum transmission charges and large load demand management services. While the bill seeks to shift transmission infrastructure costs to large energy consumers, it could impose new financial burdens on businesses requiring high electricity usage. PUC will also conduct studies on wholesale transmission cost allocation, which may lead to future regulatory changes affecting electricity pricing across the state.

Overall, SB 6 introduces long-term costs to the state while aiming to improve grid reliability and cost fairness. The bill’s implementation will require ongoing state funding and could have economic implications for businesses that depend on high electricity consumption.

Vote Recommendation Notes

SB 6 addresses Texas' growing electricity demand by improving cost allocation, grid reliability, and transparency in planning for large electricity loads. The bill aims to shift transmission infrastructure costs to large industrial consumers, implement load shed requirements to prevent residential outages, and require better forecasting and financial commitments from large electricity users. The bill's intent is to balance business growth with grid reliability, ensuring that Texas remains an attractive destination for industrial expansion while preventing reliability risks due to rapid demand increases.

However, concerns were raised in testimony regarding increased government intervention in the energy market. Critics argue that SB 6 continues a pattern of overregulation rather than allowing a competitive energy market to determine pricing and supply. Testimony highlighted that subsidizing different energy sources (including thermal generation) has not successfully counteracted the grid reliability challenges posed by renewables and federal subsidies. Instead of additional regulations and cost reallocations, a more market-driven approach—such as eliminating subsidies for all energy sources—was suggested as a better long-term solution.

Given the potential financial burden on businesses, the long-term regulatory expansion, and the risk of unintended market distortions, Texas Policy Research recommends lawmakers vote NO on SB 6 unless amended to include more flexibility in cost-sharing mechanisms, clearer standards for regulatory oversight, and a phased approach to implementation. While SB 6 addresses critical energy infrastructure challenges, its current form leans too heavily on regulatory mandates rather than incentivizing private sector solutions. A more balanced approach could better align economic growth with grid stability.

SB 6 is a named legislative priority of Texas Lt. Gov. Dan Patrick.

References

New Research Shows Texas Has the Highest Electricity Costs in the Nation

View Bill Text and Status