1. (a) Purpose. The purpose of this section is to implement Public Utility Regulatory Act (PURA) §§34.0204, 34.0205, and 35.005(g), and establish requirements and terms to provide grants and loans for funding Texas Backup Power Packages (TBPPs).

2. (b) Eligibility.

   1. (1) Applicant and critical facility eligibility. To be eligible for a grant or loan under this section, both the applicant and the critical facility must meet the following eligibility conditions.

      1. (A) Applicant eligibility. To be eligible for a grant or loan under this section, an applicant must be:

         1. (i) a legal entity authorized to operate in the state of Texas that is not and whose principals are not debarred, suspended, proposed for debarment, declared ineligible, or otherwise excluded from participation in a contract by any Texas state agency or federal agency; and
         2. (ii) either be an owner of a critical facility or be a legal entity with sufficient control over the critical facility to enter into a grant or credit agreement for the period of performance specified in the applicable agreements, which may be up to five years after TBPP commissioning.
      2. (B) Critical facility eligibility. To be eligible for a grant or loan under this section, a critical facility must be a facility located in the state of Texas that provides essential services upon which a community relies on for health, safety, and well-being.

      3. (C) A critical facility must be one of the following facility types:

         1. (i) a hospital, ambulance dispatch facility, healthcare treatment facility, police station, fire station, or critical water or wastewater facility;
         2. (ii) a medical facility or facility providing hospice, nursing, assisted living, or end-stage renal disease treatment and dialysis;
         3. (iii) a community heating or cooling center, storm shelter, or homeless shelter;
         4. (iv) an evacuation route fuel station or a gas station or grocery store in an urban or rural area with limited access to essential supplies;
         5. (v) a communications facility that serves 911 call centers and radio and television emergency alert systems; or
         6. (vi) any other facility, such as a food bank, gathering place, public school, public library, town hall or municipal building, or house of worship, which is identified as critical by the governing body of a political subdivision with applicable jurisdiction.
      4. (D) The applicant must be authorized to install a TBPP on the land on which the critical facility is located and on the critical facility's buildings and equipment that are necessary to provide its critical service functions. The applicant must also be authorized to operate the TBPP for the duration of the TBPP compliance and monitoring period.
   2. (2) Vendor eligibility. To be eligible to participate in a TBPP project at an eligible critical facility, a vendor must be selected by the commission through a competitive solicitation process. The commission will maintain an approved vendor list. Approved vendors that fail to comply with contractual terms or fail to meet performance requirements may be removed from the approved vendor list.

   3. (3) TBPP eligibility. To receive a grant or loan under this section, an applicant must coordinate with an approved vendor to install a TBPP that meets the following requirements:

      1. (A) The TBPP must:

         1. (i) be installed such that all components are physically co-located with and connected behind-the-meter at an eligible critical facility and be limited to serving a single critical facility behind a single meter;
         2. (ii) be engineered to minimize operation costs;
         3. (iii) use interconnection technology and controls that enable islanding from the power grid and stand-alone operation for the critical facility, and that prevent the sale of electric energy, ancillary services, emergency response service, or other reliability service in Texas. The critical facility must utilize such technology and controls in each instance in which the TBPP provides power;
         4. (iv) be capable of operating for at least 48 continuous hours without refueling or connecting to a separate power source;
         5. (v) be designed so that one or more TBPPs can be aggregated onsite to serve not more than 2.5 megawatts of critical load at the critical facility. Critical load is the portion of electrical load at a critical facility that is necessary to support essential health, safety, and human needs, including life-safety systems, medical care and treatment, emergency communications, potable water and sanitation systems, and other functions necessary to maintain the health, safety, and basic well-being of occupants or clients during an emergency or power outage;
         6. (vi) provide power sourced from a combination of natural gas or propane with photovoltaic panels and battery storage; and
         7. (vii) prioritize power sourced from natural gas when it is available on site.
      2. (B) The TBPP must not be used by the owner or the facility operator for the wholesale or retail sale of electric energy, ancillary services, emergency response service, or other reliability service in which the provider receives compensation in Texas.

3. (c) TBPP funding. A TBPP may be funded in whole or in part by a grant or a combination of both a grant and a loan.

   1. (1) Grants. Grant funds may be used for any costs that are reasonable and necessary including the design, procurement, installation, and operating costs to facilitate the ownership and operation of the TBPP that are not expressly excluded under subsection (d) of this section.

   2. (2) Loans. Loan funds may only be used for the following cost categories:

      1. (A) Procurement. Eligible costs under this category include:

         1. (i) costs for material and equipment delivery, and temporary storage and staging;
         2. (ii) costs for equipment, such as the generator, battery storage system, photovoltaic modules and inverters, switchgear, controllers, and associated hardware; and
         3. (iii) any other costs necessary to procure a TBPP that are not expressly excluded under subsection (d) of this section.
      2. (B) Operating costs. Eligible operating costs include costs for operations and routine preventative maintenance, and warrantied repair services during the compliance period.

4. (d) Funding exclusions. Grant or loan funds received under this section must not be used for:

   1. (1) A facility that:

      1. (A) is a commercial energy system that participates in the electric energy or ancillary services markets, emergency response service, or other reliability service for compensation in Texas; a private school; or a for-profit entity that does not directly serve public safety and human health;
      2. (B) is a private residence;
      3. (C) operates under a land lease agreement that expires prior to the end of the project compliance period or that does not have the lessor's written consent to install a TBPP;
      4. (D) installs a source of backup power that does not follow the design and use standards of a TBPP;
      5. (E) uses the TBPP for the wholesale or retail sale of electric energy, ancillary services, emergency response service, or other reliability service in which the provider receives compensation in Texas;
      6. (F) uses the TBPP as a controllable load resource;
      7. (G) uses the TBPP to participate in an aggregated distributed energy resource (ADER) program or a demand response program administered by a retail electric provider, municipally owned utility, electric cooperative, or an electric utility; or
      8. (H) uses the TBPP for demand reduction.

   2. (2) Project costs that are:

      1. (A) not included in a quotation provided by an approved vendor;
      2. (B) for integrating existing backup power equipment into a TBPP installation;
      3. (C) for building or electrical upgrades to a critical facility, except for the purpose of segregating critical circuits;
      4. (D) related to segregating existing backup power equipment;
      5. (E) associated with any enhanced system features outside the standard TBPP offering from an approved vendor;
      6. (F) for the exclusive benefit of the critical facility or its owner;
      7. (G) associated with operating costs incurred by the critical facility that are not directly required by the TBPP; or
      8. (H) refueling costs or additional operations and maintenance costs outside the service agreement with the approved vendor.

5. (e) Application requirements. An application must be submitted by an applicant in the form and manner prescribed by the commission. An applicant may submit one or more applications for an award under this section. Each application must only contain one critical facility project. An application must contain the information required by this subsection. An applicant may withdraw an application at any time while under review. An applicant may submit an application for a critical facility after a prior application for the same critical facility has been rejected, if there are material changes to the application information.

   1. (1) Applicant information.

      1. (A) A corporate sponsor or the most senior parent corporation or owner entity may submit an application on behalf of a subsidiary applicant. An application for a TBPP with multiple owners must be submitted by the highest level of the entity with managing authority over the critical facility (e.g., owner with controlling interest, managing partner, or cooperative).

      2. (B) Each application must include information about the applicant, including:

         1. (i) the applicant's legal name;
         2. (ii) the applicant's form of organization;
         3. (iii) the applicant's relationship to the critical facility in the proposed project;
         4. (iv) the applicant's primary contact name and title, mailing address, business telephone number, business e-mail address, and web address;
         5. (v) information showing that the applicant is in good financial standing with relevant financial institutions, is meeting all compliance requirements, and that neither it nor its principals are debarred, suspended, proposed for debarment, declared ineligible, or otherwise excluded from participation in a contract by any Texas state agency or federal agency;
         6. (vi) the applicant's agreement to adhere to TBPP performance requirements;
         7. (vii) a description of the applicant's past grant and loan management and administration experience, if applicable;
         8. (viii) proof of title or information showing control over the critical facility site at which a TBPP will be installed for a duration of at least six years;
         9. (ix) an attestation by an authorized officer of the applicant that the applicant is authorized to apply for and operate the TBPP at the critical facility;
         10. (x) the applicant's justification for seeking program funds to cover a portion of TBPP costs; and
         11. (xi) documentation and evidence that the applicant has sufficient resources to support the TBPP through the compliance period, including those resources required to pay for any necessary but otherwise ineligible facility or project costs.

   2. (2) Critical facility information. For the critical facility for which an applicant is seeking a TBPP, the application must include:

      1. (A) Critical facility information, including:

         1. (i) the facility's name;
         2. (ii) the facility type as enumerated under (b)(1)(C) of this section;
         3. (iii) the facility's physical address and mailing address;
         4. (iv) the facility's owners including the ultimate parent company or holding company of the critical facility;
         5. (v) the key personnel associated with TBPP project operation;
         6. (vi) a description of activities that the critical facility undertakes to support community health, safety, and well-being;
         7. (vii) a description of the facility's community impact, including the service area and the quantity and type of population served;
         8. (viii) a statement describing the manner in which a TBPP installation will enhance the community impact of the critical facility;
         9. (ix) average daily electric energy consumption measured in kilowatt-hours; maximum daily electric demand measured in kilowatts; and the facility's maximum daily critical load measured in kilowatts; each calculated over a twelve-month period;
         10. (x) if the facility type is described under (b)(1)(C)(iv) of this section, documentation demonstrating that the critical facility is directly adjacent to, or immediately serving traffic on, designated evacuation corridors in the State; or documentation demonstrating that a grocery store is located in a geographic area that has limited access to essential supplies. In substantiating eligibility under this subparagraph, a critical facility may use publicly available governmental resources, including the Texas Department of Transportation's Statewide Planning Map identifying district hurricane evacuation routes, and the United States Department of Agriculture's Food Access Research Atlas, or equivalent tools identifying communities with limited access to groceries and other essential supplies; and
         11. (xi) if the facility type is described under (b)(1)(C)(vi) of this section, documentation from the applicable governmental body identifying the facility as critical.

      2. (B) Backup power information, including:

         1. (i) information related to any existing backup power system, including a description of the type of technology used and the system's rated maximum capacity; and
         2. (ii) the facility's required backup power capacity, requested TBPP size, and justification for capacity and size based on the critical facility's critical load.

   3. (3) Project information. For the critical facility for which an applicant is seeking a TBPP, the application must include all project information required by this subsection. Following the executive director or his or her designee's determination of applicant and critical facility eligibility and assignment of an approved vendor to the critical facility, the approved vendor must coordinate with the applicant and the critical facility to prepare and submit the required project information. An eligible applicant and critical facility must provide all relevant information to the approved vendor to satisfy the requirements of this subsection.

      1. (A) Project information, including:

         1. (i) package configuration and technical specifications;
         2. (ii) the total TBPP project budget;
         3. (iii) the respective portions of the project budget to be funded through a grant and loan;
         4. (iv) the respective portions of the project budget by site preparation, package costs, installation, and maintenance;
         5. (v) any ineligible costs that the applicant will fund separately; and
         6. (vi) the vendor quotation and an indication of applicant approval of the quotation.

      2. (B) A project work plan, including:

         1. (i) a proposed project scope and installation schedule;
         2. (ii) information demonstrating the feasibility of the project, including documentation establishing that the TBPP can be installed at the critical facility;
         3. (iii) documentation that all permissions, approvals, and permits required by applicable laws and regulations have been obtained, or a detailed plan for obtaining all required permissions, approvals, and permits; and
         4. (iv) an operation and maintenance plan.
   4. (4) Information submitted to the commission at any time for the purpose of enabling the executive director or his or her designee to make a determination on the award of a grant or loan under Texas Utilities Code, Chapter 34, Subchapter B, as part of the application process is confidential and not subject to disclosure under Chapter 552, Government Code.
   5. (5) If an application has been previously rejected, information explaining material changes to this application relative to the previous application.
   6. (6) The TxEF administrator may request additional information associated with the items in this subsection if necessary to evaluate any project.

6. (f) Application review.

   1. (1) Applicant and critical facility eligibility review . An applicant and critical facility must be approved as eligible and obtain notice of eligibility before submitting a TBPP project proposal under paragraph (e)(3) of this subsection.

      1. (A) The TxEF administrator will review applications in the order in which they are received.
      2. (B) The TxEF administrator will evaluate applicant and critical facility eligibility in accordance with subsection (b)(1) of this section.
      3. (C) The executive director or his or her designee will determine applicant eligibility and will provide notice that an eligible applicant is authorized to coordinate with an approved vendor for the purpose of submitting a TBPP project application to the commission.

   2. (2) Project approval. The executive director or his or her designee will approve, deny, or approve with modifications an application submitted by an eligible applicant for each TBPP project based on the screening and evaluation criteria outlined in this subsection.

      1. (A) Each proposed TBPP project will be evaluated based on the following:

         1. (i) the project cost;
         2. (ii) the timeline for TBPP installation and commissioning, together with other applicant, critical facility and project information provided in the application;
         3. (iii) the TBPP's expected benefits and impact. While evaluating benefits and impact, the executive director or his or her designee will consider factors such as the applicant's facility type and the criticality of services offered, the number of people served by the facility, the facility's ability to address regional needs, and the diversity of geography served by the critical facility in relation to other selected applicants;
         4. (iv) the applicant's resources to implement the project and comply with compliance and performance requirements;
         5. (v) the critical facility's current backup power capabilities; and
         6. (vi) the creditworthiness of the applicant based on the amount of the loan requested.
      2. (B) The TxEF administrator may request additional information associated with the items in this subsection if necessary to evaluate any project.

7. (g) Award amount. Eligible applicants may receive a grant or a combination of a grant and loan towards eligible costs in accordance with subsection (c) of this section.

   1. (1) The amount of the grant and loan award will be determined by the executive director or his or her designee based on availability of program funds and evaluation of the applicant, critical facility, and project by the TxEF administrator.
   2. (2) A grant award may not exceed $500 per kilowatt.
   3. (3) A loan award will be structured as a forgivable loan consistent with subsection (h)(5) of this section.

8. (h) Funding structure and terms.

   1. (1) To receive an award payment under this section, an applicant must enter into an award agreement or agreements in the form and manner specified by the TxEF administrator.
   2. (2) Any TBPP costs funded by a grant or loan under this section must not be collected from customers or constituents of the critical facility.
   3. (3) An uncured breach of the executed award agreement will be grounds for the executive director or his or her designee to determine that an applicant is ineligible to obtain any future payments or forgiveness under this section.

   4. (4) Funding terms for grants.

      1. (A) Payment terms for a project will be specified in the corresponding grant agreement executed by the awardee, the vendor, and the executive director or his or her designee on behalf of the commission. An awardee and vendor must comply with all terms and conditions applicable to each party, as described in the grant agreement, including all reporting requirements, and all federal or state statutes, rules, regulations, or guidance applicable to the grant award to be eligible for grant fund disbursement.
      2. (B) Grant funds will be paid directly to an approved vendor as a reimbursement payment upon the vendor's submission of required documentation substantiating achievement of TBPP installation milestones in accordance with the grant agreement.
      3. (C) All other costs required for project completion must be financed by the awardee or awarded through a loan under this section.
      4. (D) The commission will withhold or require the return of payments for costs that are found ineligible or if an awardee or an approved vendor fails to comply with the requirements described in subsection (i) of this section and an executed grant agreement. The grant agreement will delineate the respective responsibilities of the awardee and the approved vendor, establish performance milestones, performance metrics, targets, deliverables, cure periods, remedies, and the procedures applicable to the awardee's and approved vendor's obligation to pay the commission the grant amount in the event of a default.

   5. (5) Funding structure and terms for loans.

      1. (A) Loan structure. An approved loan will have the following characteristics:

         1. (i) Loan term. The loan will have a term of 1 to 5 years, which will be contingent upon the size of the loan, attributes of the critical facility, and financial capabilities of the applicant.
         2. (ii) Forgivability. Up to 100 percent of the loan funds are forgivable, if an awardee and approved vendor meet the performance expectations delineated in the credit agreement. Loans will be forgiven on a prorated basis based on the duration of performance during the compliance period. Failure to meet any requirements for loan forgiveness and after the close of any applicable cure period described in the credit agreement, the full loan amount plus any accrued interest will become immediately due and payable.
         3. (iii) Loan interest rate. Unforgiven loan amounts will bear an interest rate equal to the effective federal funds rate published on the date an award agreement is executed plus one percent.

      2. (B) Loan terms and agreements.

         1. (i) Loan funds will be paid directly to an approved vendor as a reimbursement payment upon the vendor's submission of required documentation substantiating achievement of TBPP installation milestones in accordance with the credit agreement.

         2. (ii) Each awardee must enter into one or more award agreements with the commission and approved vendor. Such agreements must include the following:

            1. (I) a credit agreement, which is the primary award agreement among an awardee, an approved vendor, and the executive director, or his or her designee, acting on behalf of the commission, will govern the terms and conditions under which the commission will loan funds under this section. The credit agreement will delineate the respective responsibilities of the awardee and the approved vendor, establish performance milestones, performance metrics, targets, deliverables, cure periods, remedies, and the procedures applicable to the awardee's and approved vendor's obligation to pay the commission the full loan amount in the event of a default; and
            2. (II) for an awardee that is not a governmental entity, a pledge of a secured interest in the TBPP in favor of the commission for the term of the credit agreement.

9. (i) Compliance and monitoring period.

   1. (1) Each project will be subject to a compliance period of up to 5 years. The duration of the compliance period will be determined based on the size of the grant or loan awarded. Any specific project milestones and performance requirements which are stated in the award agreements will apply during this period.

   2. (2) During the compliance and monitoring period, the TBPP must be available to operate during any period of time when the critical facility experiences a power outage.

      1. (A) An awardee must ensure the routine maintenance and testing of the TBPP. Such maintenance and testing must be performed under contract by an approved vendor.
      2. (B) If the TBPP fails to be available to operate during an outage event, the commission may require the return of any grant funds disbursed or may determine that all or a portion of a loan is not forgivable. Responsibility for repayment will be with the awardee or the approved vendor or both, as applicable, based on the nature of any default and awardee's and vendor's respective obligations as described in the award agreements.
   3. (3) An awardee must continue to provide critical services at the critical facility during the compliance period. Change in status as a critical facility during the compliance period may result in a breach of the award agreement, requiring the return of an award payment or termination of the award agreement.

   4. (4) Reporting requirements.

      1. (A) Vendor reporting. An approved vendor must annually file with the commission a report in accordance with the grant and loan reporting requirements as described in the grant and credit agreements.
      2. (B) Critical facility reporting. Each awardee must annually submit to the commission a report containing an attestation that the TBPP was maintained in good working condition and was available to provide backup power during the compliance period; and that the awardee continued to provide critical services at the critical facility during the compliance period. Each awardee must also submit an after-action report with the commission that contains details of the TBPP performance in the event of a distribution system outage lasting more than 12 consecutive hours.
10. (j) No contested case or appeal. An application for a grant or loan under this section is not a contested case. A commission decision on a grant or loan award is not subject to a motion for rehearing or appeal under the commission's procedural rules.
11. (k) Relationship to distribution service provider network. An applicant requesting to install a TBPP at a critical facility that involves interactivity with the distribution network must have its vendor selected in accordance with subsection (b)(2) of this section to coordinate with the appropriate distribution service provider (DSP) to facilitate safe operation for the TBPP and the distribution network. The vendor must comply with the DSP's applicable processes and requirements for safe operation of the network. The DSP must provide a list of its processes and requirements in the form of a request form, checklist, or similar documentation to the vendor. A DSP that is an electric utility must expedite an interconnection request for a commission-approved TBPP project, provided that the commission has explicitly authorized the TBPP to be interconnected to the electric grid.
12. (l) Expiration. This section expires September 1, 2050.

Source Note:The provisions of this §25.513 adopted to be effective May 27, 2026, 51 TexReg 3565.