The bill, S.B. No. 1978, aims to regulate the interconnection of facilities within the Electric Reliability Council of Texas (ERCOT) power region to facilities located outside of Texas. It transfers and redesignates existing sections of the Utilities Code to create a new section, 39.169, which outlines the conditions under which such interconnections can occur. Specifically, it prohibits any person, including electric cooperatives and municipally owned utilities, from interconnecting a facility in the ERCOT region to an external facility unless the Texas commission determines that the interconnection aligns with free market principles and does not place control of the Texas electric grid under federal jurisdiction. Additionally, the person must comply with relevant requirements of Chapter 37 and the new section.

The bill also establishes a timeline for obtaining necessary determinations from the commission, requiring that applications be submitted at least 180 days before seeking any related orders from the Federal Energy Regulatory Commission. It includes provisions for expedited approval of applications related to specific interconnection agreements and clarifies that the commission retains the authority to adopt general rules or protocols. The new regulations will only apply to actions taken after the bill's effective date, with prior actions governed by the existing law. The bill is set to take effect immediately upon receiving a two-thirds vote from both houses or on September 1, 2025, if such a vote is not achieved.