Relating to loans and grants awarded from the Texas energy fund.
ModeratePlan for compliance
Low Cost
Effective:2025-09-01
Enforcing Agencies
Public Utility Commission of Texas
01
Compliance Analysis
Key implementation requirements and action items for compliance with this legislation
Implementation Timeline
Effective Date: September 1, 2025 (or immediately upon Governor's signature if passed by a two-thirds vote).
Compliance Deadline: Immediate for entities with pending TEF applications who wish to utilize the new security structures. Extension requests for disbursement should be filed by Q3 2025.
Agency Rulemaking: The Public Utility Commission (PUC) is not explicitly mandated to create new rules, but they must adjudicate disbursement extensions on a "case-by-case" basis. Expect a "regulatory gray zone" regarding the definition of "market factors" until the first extension requests are ruled upon in late 2025.
Immediate Action Plan
Immediately: Direct outside counsel to supplement pending TEF applications to reflect the new parity debt security structure (MOUs/ECs only).
Immediately: Update email footers and document templates to include the specific SB 2268 confidentiality citation for all TEF-related communications.
Q3 2025: Audit project timelines. If a 2025 commercial operation date (COD) is at risk, begin drafting the "Market Factor" justification dossier for a disbursement extension request.
Ongoing: Monitor PUC open meetings for the first "test case" regarding disbursement extensions to gauge the Commission's strictness on the definition of "market factors."
Operational Changes Required
Contracts
Master Trust Indentures (MOUs & ECs): You must direct bond counsel to review existing indentures. Confirm that TEF loans, now structured as parity debt under SB 2268, satisfy your "Additional Bonds" or "Additional Indebtedness" tests.
Loan Agreements: Pending loan agreements must be revised to reference Section 34.0104(b-1) as the statutory authority for the security interest.
EPC Contracts: If your project timeline risks crossing the Dec 31, 2025 threshold, ensure your Engineering, Procurement, and Construction contracts contain specific force majeure or delay clauses that align with the "market factors" justification required for a TEF extension.
Hiring/Training
Document Management Protocols: Update internal training for regulatory teams. The bill expands confidentiality to information submitted "at any time." Staff must be trained to mark all post-application correspondence (emails, RFIs, status updates) as "CONFIDENTIAL – SB 2268/UTIL CODE 34.0103." Do not rely on the initial application's NDA.
Reporting & Record-Keeping
Disbursement Extension Requests: To access funds after Dec 31, 2025, you must file a formal request. You must maintain an evidentiary record starting now—documenting supply chain delays, interconnection queue issues, and interest rate volatility—to prove "market factors" necessitated the delay.
Fees & Costs
No new state fees.
Legal Costs: Anticipate billable hours for bond counsel to restructure the security provisions of pending loan applications.
Strategic Ambiguities & Considerations
Definition of "Market Factors": The statute allows disbursement extensions based on "market factors" but fails to define the term. It is unclear if the PUC will accept general inflationary pressures or if they will require specific, documented supply chain failures.
"Case-by-Case" Discretion: The PUC has broad discretion to deny extensions. There is no automatic safe harbor. If the PUC determines a delay is due to applicant mismanagement rather than external market forces, funding could be revoked.
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Information presented is for general knowledge only and is provided without warranty, express or implied. Consult qualified government affairs professionals and legal counsel before making compliance decisions.
S.B. 2627, enacted by the 88th Legislature, created the Texas Energy Fund (TEF) to support the development of new dispatchable generation in Texas. Pursuant to the provisions of the TEF In-ERCOT loan program, the Public Utility Commission of Texas (PUC) is directed to identify eligible projects for loan consideration, execute loan agreements with qualified applicants, and ensure the initial disbursement of loan funds to awardees by December 31, 2025.
Since the initiation of the TEF In-ERCOT loan program, unforeseen market-related challenges, such as supply chain disruptions and permitting delays, have impacted the timelines of several otherwise qualified projects. As a result, some applicants have expressed concern regarding their ability to meet the statutory deadline for the initial loan disbursement.
S.B. 2268 seeks to address these concerns by giving the PUC discretion to disburse initial TEF loan funds after December 31, 2025, on a case-by-case basis, where market factors constitute justification for extending the deadline. S.B. 2268 would provide a necessary degree of flexibility in the administration of the TEF loan program, ensuring that qualified applicants adversely affected by market factors beyond their control remain eligible to participate.
As proposed, S.B. 2268 amends current law relating to disbursement of initial funds under the Texas Energy Fund.
RULEMAKING AUTHORITY
This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Section 34.0104(1), Utilities Code, as follows:
(1) Prohibits the Public Utility Commission of Texas (PUC) from disbursing, rather than authorizes the PUC to disburse, the initial funds for a loan under Section 34.0104 (Loans for the Electric Reliability Council of Texas Power Region) after December 31, 2025, if the PUC determines that market factors necessitate an extension of the deadline for disbursement of initial funds. Authorizes an applicant to request disbursement of initial funds after December 31, 2025. Requires the PUC to approve or deny the request on a case-by-case basis.
SB 2268 fundamentally restructures debt security options for Municipally Owned Utilities (MOUs) and Electric Cooperatives (ECs) seeking Texas Energy Fund (TEF) loans, permitting these loans to be treated as parity debt rather than subordinate obligations. For all generation developers, the bill expands confidentiality protections to all correspondence with the PUC and creates a statutory mechanism to extend funding disbursement beyond the previous December 31, 2025, hard deadline. Implementation Timeline Effective Date: September 1, 2025 (or immediately upon Governor's signature if passed by a two-thirds vote).
Q
Who authored SB2268?
SB2268 was authored by Texas Senator Charles Schwertner during the Regular Session.
Q
When was SB2268 signed into law?
SB2268 was signed into law by Governor Greg Abbott on June 12, 2025.
Q
Which agencies enforce SB2268?
SB2268 is enforced by Public Utility Commission of Texas.
Q
How urgent is compliance with SB2268?
The compliance urgency for SB2268 is rated as "moderate". Businesses and organizations should review the requirements and timeline to ensure timely compliance.
Q
What is the cost impact of SB2268?
The cost impact of SB2268 is estimated as "low". This may vary based on industry and implementation requirements.
Q
What topics does SB2268 address?
SB2268 addresses topics including state finances, state finances--management & control, utilities, utilities--electric and public utility commission.
Legislative data provided by LegiScanLast updated: November 25, 2025
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