The bill, H.B. No. 3374, aims to address market distortions in electricity pricing within the ERCOT power region that are caused by federal tax credits, specifically those provided under 26 U.S.C. Section 45. It introduces a new section, 39.171, to the Utilities Code, which mandates the Texas commission and the ERCOT independent system operator to establish rules, operating procedures, and protocols to eliminate or compensate for these distortions. The bill emphasizes that costs associated with the sale of electricity eligible for federal tax credits, including those related to maintaining sufficient capacity during peak demand, should be borne by the parties responsible for imposing those costs.

Additionally, the bill requires the commission and ERCOT to eliminate any existing rules or procedures that adjust electricity prices based on reserve levels and the value of lost load. This legislative change is intended to create a more equitable pricing structure in the electricity market, ensuring that the financial impacts of federal tax credits do not unfairly burden the system or consumers. The provisions of this act are set to take effect on September 1, 2025.

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