The Senate Committee on Business & Commerce interim report to the 88th Legislature covers broadband and telecommunications, supply chain issues, blockchain and virtual currencies, the state electric grid, cybersecurity, and remote work for the state workforce. For more information see the full report here.
Spotlight on Recommendations
Charge 1. Broadband and Telecommunications: Study broadband and other telecommunications related issues impacting Texans, including the implementation of HB 5, HB 1505, and HB 2911 and reviewing the Texas Universal Service Fund, HB 2911.
- The Legislature can help the state build upon the groundwork laid by House Bill 5 in the following ways:
- Determine any legislative action necessary to address conflicts between state law and federal guidance.
- Ensure the Broadband Development Office has the necessary staffing and resources to manage the administration of federal grant dollars.
- Determine options to replace the federal dollars previously allocated to HB 1505 (87R).
- In order to address both the short and long-term viability of the Texas Universal Service Fund, the Committee recommends the Legislature consider the following changes:
- Evaluate the appropriateness of qualifying eligible providers based on density.
- Conduct a holistic study of the fund to evaluate ways to increase transparency, determine eligibility requirements, and identify long-term funding options.
- Consider the appropriateness of maintaining the federal make-whole provision.
- Establish a workgroup between the Broadband Development Office and Public Utility Commission to coordinate broadband infrastructure development in USF-covered areas.
- The transition to NextGen9-1-1 requires the ongoing and intensive coordination between CSEC and all Texas 9-1-1 entities, and the Legislature may consider the following recommendations.
- Consider amending the date by which the NextGen9-1-1 allocated funds must spent to August 31, 2025, instead of December 31, 2024, in order to better align the spend deadline with the target implementation deadline for statewide NextGen9-1-1 deployment.
- Consider extending the target date for implementing NextGen9-1-1 and the expiration of the Next Generation 9-1-1 Service Fund past Sept. 1, 2025, allowing the Commission to create a second phase timeline to ensure that all 9-1-1 entities implement NextGen9-1-1 in a timely fashion and most importantly that none of the funds dedicated to deployment are left unspent should the grant subrecipients face any delays outside of their control including supply chain issues. Without a timeline extension, CSEC advises that some allotted funds risk being unspent by the target deadline.
- Consider options included in the Rider 9 plan to support the long-term fund balance of GR-D Account 5050, 9-1-1 Service Fees, in order to the accomplish the Commission’s mission of providing Texans with reliable emergency communication service.
Charge 2. Supply Chains: Examine the causes and impacts of recent supply chain disruptions on the Texas economy and individual industries.
- While this is a global issue, the Committee recognizes the importance of examining it in a localized manner to determine any steps the State of Texas can take to address it. As such, it is recommended that the Legislature consider the following:
- Structure of existing, or any potential new, economic incentives for onshoring, reshoring, and regionalizing supply chains.
- State contributions to workforce initiatives related to public education, higher education, and those available for private businesses; and
- Support the onshoring of facilities through strengthening the Texas electric grid and support probusiness regulatory environment.
Charge 3. Blockchain and Virtual Currencies: Study current state and federal regulations surrounding blockchain and virtual currencies.
- Consider and enact the proposed 2022 Amendments to the UCC dealing with technological changes, including a new Article 12 and amendments to Article 9, as recommended by the Texas Work Group on Blockchain Matters.
- Establish an innovation center within Department of Information Resources (“DIR”); and direct DIR to develop a decision model to assist agencies in deciding if blockchain technology is appropriate for infrastructure consideration.
- Consider and enact the 2021 model law published by the Conference of State Bank Supervisors (CSBS) called the Money Transmission Modernization Act (MTMA). The model law seeks to establish a common baseline of regulatory standards to be used across the country for money transmitters, making it easier for companies to operate across state lines, enable efficient cooperation among states to work together in licensing and supervision of money transmitters, and strengthen consumer protection through enhanced prudential standards and disclosure requirements.
Charge 4. Electricity: Assess the electricity market in Texas.
- Natural Gas Supply Chain. The events of February 2021 brought to light the inexorable link between the state’s natural gas pipeline and power generation systems. While the changes made during last session, including requiring facilities to designate as critical and formulizing the Texas Energy Reliability Council, have made significant improvements to the coordination and communication efforts of state regulators and industry stakeholders, there is more work to be done to improve reliability of gas-fired power plants. To this end, the Committee recommends consideration of the following actions:
- Continue to encourage more collaboration between industries, including ways to construct a contracting scheme that accounts for the unique needs of gas-fired generators in a competitively balanced manner;
- Consider extending similar provisions included in HB 3273 (2007) which eliminated certain confidentiality clauses between producers and gathering pipelines;
- Evaluate the need for more oversight and regulatory authority of pipeline affiliates and third party marketing companies; and
- Support efforts at the PUC to implement a Phase II Firm Fuel Ancillary Service to compensate for offsite firm fuel resources while ensuring proper oversight and transparency into Firm Fuel contracts.
- Market Design. As the PUC and ERCOT continue their implementation of the Phase I Market Design changes, as well as their deliberation of the Phase II Market Design proposals, the Committee recommends taking the following actions:
- Direct the PUC to set a reliability standard for the ERCOT region in line with SB 3;
- Ensure that any changes to the ERCOT market design reflect the allocated costs based on the principles of cost-causation, including the consideration of firming requirements on intermittent resources and penalties for nonperformance; and
- Consider the value in incentivizing new dispatchable generation resources through alternative solutions such as a low-interest loan program or creation of an ancillary service product targeted towards new quick starting natural gas units. Ensure any market design changes protect the integrity of the competitive retail market.
- Transmission Planning. In order to better plan for the future needs of Texas and increase the resiliency of the transmission system, the Committee recommends the consideration of the following items:
- Evaluate the benefits of providing ERCOT with more visibility into the distribution system, including as a means to create more opportunities for demand response programs on the distribution-level;
- Consider limiting the amount of capital costs passed on to consumers for generation resources in order to incentivize better siting decisions closer to centers of load;
- Review options for increasing resiliency in the transmission system in a manner that does not over burden ratepayers;
- Review the 4 Coincidental Peak program to determine whether any changes are necessary;
- Consider requiring large flexible loads to register as interruptible or controllable load resources;
- Direct ERCOT to form an electric vehicle planning task force to prepare for the impact of electric vehicle charging on the electric grid; and
- Consider the appropriateness of regulated utilities owning or operating electric vehicle charging stations.
Charge 5. Cybersecurity: Review current state and federal laws regarding cybersecurity protections and requirements for local governments, state agencies, and critical industries of our state.
- The Committee recommends the Legislature continue to support a proactive approach to cybersecurity management in the following ways:
- Prevent governmental entities from paying ransomware in order to reduce the incentive for nefarious actors to target public domains.
- Prevent governmental entities from entering into contracts that would prohibit or limit information sharing with DIR or requiring agencies from utilizing specific vendors for remediation.
- Support efforts by the State Office of Risk Management and Department of Information Resources to collaborate on a state-sponsored cybersecurity insurance line.
- Support the modernization and hardening of state agency information technology systems.
- Encourage state agencies to partner with private industry as a means to foster information sharing about potential threats and best practices. Ensure regulated entities who engage with the state maintain strong cybersecurity protections.
Charge 6. State Workforce: Study where state employees are located and the benefits and drawbacks of remote working.
- Information gathered suggest the need to improve recruitment and retention amongst agencies to ensure the State remains a competitive employer. This includes, but is not limited to, building out strong telework and remote work programs as appropriate. It is imperative that the state strikes the appropriate balance of affording flexibilities while simultaneously ensuring all objectives and metrics are met within the workplace. The Committee recommends the Legislature consider the following:
- Feasibility of tying telework and remote work eligibility to job classification;
- Required approval requirements and/or written agreements for managers and their team members;
- State investment in proper equipment allowing maintenance of cybersecurity requirements for offsite locations;
- Economic incentives for rent or purchase of state buildings either relocating or establishing new locations outside of Austin, easing the cost of living burden on employees and providing for economic development outside of the Capitol region;
- Bolster information gathering by SAO and agencies through their audits, exit surveys, and State Employee Engagement (SEE) surveys to better inform these efforts and obtain accurate comparison to the private sector; and
- Create more internship opportunities for agencies that lead to full-time positions, as well as any other potential pipelines to state employment.