HBA-TYH H.B. 2048 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 2048
By: Brimer
State Affairs
3/11/1999
Introduced



BACKGROUND AND PURPOSE 

Under the current Utilities Code, natural gas and oil royalties may be
taken in kind and marketed by the state.  Natural Resources Code requires
oil or gas leases from certain state entities or from the owner of the soil
on Relinquishment Act land (Chapter 52, Subchapter F, Natural Resources
Code) to include a provision granting these parties the right to take their
respective royalty in kind and give the commissioner of the General Land
Officer (commissioner) and others the right to negotiate and execute
contracts for sale, transport, or storage.  It also grants the right to
enter into insurance contracts or other agreements to secure or to
guarantee payment of the in kind sales and authorizes the parties to
negotiate and execute contracts for disposing of royalty in kind.   

H.B. 2048 expands the scope of the program to convert natural gas into
electricity, giving the commissioner the authority to market electricity to
wholesale and public retail customers, the potential to take royalties in
kind on all state owned land, including university lands, the ability to
purchase or enhance these in kind volumes with additional volumes, and the
flexibility to either sell the commodity as is or to convert it to other
forms of energy.  This bill enables the commissioner to convert in kind
natural gas to electricity and gives the state the opportunity to increase
the revenues generated from state lands for the benefit of public and
higher education. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 31.002(1), Utilities Code, to provide that the
term "electric utility" does not include this state or an agency of this
state.  Makes conforming changes. 

SECTION 2.   Amends Chapter 35, Utilities Code, by adding Subchapter D, as
follows: 

SUBCHAPTER D.  STATE AUTHORITY TO SELL OR CONVEY POWER
 
Sec. 35.101.  DEFINITIONS.  Defines "commissioner" and "public retail
customer." 

Sec. 35.102.  STATE AUTHORITY TO SELL OR CONVEY POWER.  Authorizes the
commissioner of the General Land Office (commissioner) to sell or otherwise
convey power directly to a public retail customer regardless of whether the
public retail customer is also a wholesale customer.  

Sec. 35.103.  ACCESS TO TRANSMISSION AND DISTRIBUTION SYSTEMS; RATES. (a)
Provides that the state is entitled to have access to all transmission and
distribution systems of all electric utilities, municipally owned
utilities, and electric cooperative corporations that serve public retail
customers.  

(b)  Requires an entity described by Subsection (a) to provide any utility
service, including transmission, distribution, and other services to the
state at the lowest applicable rate charged for similar service to other
customers.  
  
Sec. 35.104.  RETAIL TRANSACTION LIMIT.  Prohibits the state from engaging
in retail transactions that exceed two and one-half percent of a retail
electric utility's total retail load in a service area.  
 
Sec. 35.105.  COSTS OF SERVING STATE AGENCY.  Prohibits an electric
utility, municipally owned utility, or electric cooperative corporation
from recovering from any customer the assigned and allocated costs of
serving a state agency, institution of higher education, public school
district, or political subdivision of this state.  
 
Sec. 35.106.  WHOLESALE CUSTOMERS.  Provides that this subchapter does not
prevent the commissioner from registering as a power marketer.  

SECTION 3.  Amends Sections 52.133(a),  (c), and (d), Natural Resources
Code, as follows: 

(a)  Deletes the exception of the Board for Lease of University Lands from
a list of boards required to include a provision granting land to various
entities and the commissioner the authority to take their royalty in kind. 

(c)  Authorizes the commissioner to negotiate and execute contracts, at the
direction of the Board for Lease of University Lands and other specified
boards, that are necessary to dispose of or enhance their portion of the
royalty taken in kind, including contracts for sale, purchase,
transportation, and storage and including other contracts or agreements, to
secure or guarantee payment.  Makes nonsubstantive changes. 

(d)  Authorizes the commissioner, the owner of the soil under Subchapter F
(Relinquishment) or the commissioner acting on behalf of and at the
direction of an owner of the soil under Subchapter F, the school land
board, or a board  for lease, to negotiate and execute contracts or any
other instruments or agreements necessary to convert that portion of the
royalty taken in kind into other forms of energy, including electricity.
Deletes text stating that this section is not applicable to the Board for
Lease of University Lands. 

SECTION 4.  Amends Section 53.026, Natural Resources Code, as follows:

(a)  Makes conforming changes and a nonsubstantive change.

(b)  Authorizes the commissioner or the commissioner acting on behalf of
and at the direction of the board or a board for lease to negotiate and
execute a contract or any other instrument or agreement necessary to
convert that portion of the royalty taken in kind to other forms of energy,
including electricity. 

(c)  Created from existing text. 

SECTION 5.  Amends Section 53.077, Natural Resources Code, as follows:

(a)  Makes a conforming change.

(b)  Authorizes the commissioner, each owner of the soil under this
subchapter, or the commissioner acting on behalf of and at the direction of
the owner of the soil under this subchapter to negotiate and execute a
contract or any other instrument or agreement necessary to convert that
portion of the royalty taken in kind to other forms of energy, including
electricity.  

(c)  Created from existing text.

SECTION 6.Effective date: September 1, 1999.

SECTION 7.Emergency clause.