HBA-NLM, TYH, ATS C.S.S.B. 7 76(R)BILL ANALYSIS
Office of House Bill AnalysisC.S.S.B. 7
By: Sibley
State Affairs
5/17/1999
Committee Report (Substituted)
BACKGROUND AND PURPOSE
Currently, the Public Utility Regulatory Act (Act) authorizes the Public
Utility Commission (PUC) to regulate the electricity market and ensure that
only one electric energy provider serves each area of the state. C.S.S.B.
7 restructures electric utility service, including deregulating the
electricity generation market and permitting providers to compete for
customers who choose their electricity supplier in competitive areas. It
also authorizes the PUC to develop and promulgate customer protection rules
during and after a transition to a competitive market.
RULEMAKING AUTHORITY
It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the Public Utility Commission in
SECTION 17 (Section 35.004, Utilities Code), SECTION 37 (Section 38.005,
Utilities Code), SECTION 40 (Sections 39.101, 39.107, 39.153, 39.155,
39.157, 39.203, 39.351, 39.352, 39.903, 39.904, 39.9044, 39.905, 40.003,
41.003, Utilities Code), SECTIONS 45 (Section 551.086, Government Code), 46
(Section 551.131, Government Code), 60 (Section 9E, Article 601d,
V.T.C.S.), and 66; to the Texas Public Finance Authority in SECTION 60
(Section 9E, Article 601d, V.T.C.S.); to the commissioner of education in
SECTION 40 (Section 39.901, Utilities Code); to the Texas Natural Resource
Conservation Commission in SECTION 40 (Section 39.264, Utilities Code); to
regulatory authorities in SECTION 40 (Section 39.001, Utilities Code); to
the secretary of state in SECTION 40 (Section 39.309, Utilities Code); and
to the comptroller of public accounts in SECTION 40 (Sec. 39.901, Utilities
Code) of this bill. Rulemaking authority previously delegated to the
Public Utility Commission is modified in SECTION 40 (Section 39.101,
Utilities Code) of this bill.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Section 11.003, Utilities Code, as follows:
Sec. 11.003. DEFINITIONS. Defines "electric cooperative" and redefines
"affected persons," "cooperative corporation," "corporation," "person,"
"ratemaking proceeding," and "service." Redesignates Subdivisions (10)-(20)
to Subdivisions (11)-(21), respectively. Makes nonsubstantive changes.
SECTION 2. Amends Section 12.005, Utilities Code, which provides that the
Public Utility Commission of Texas (PUC) is subject to Chapter 325,
Government Code (Texas Sunset Act). Provides that unless PUC is continued
in existence as provided by that chapter or by Chapter 39, PUC is abolished
and this title expires September 1, 2005, rather than September 1, 2001.
SECTION 3. Amends Section 12.101, Utilities Code, to delete language
requiring PUC to employ a general counsel. Redesignates Subdivision (3) to
Subdivision (2). Makes nonsubstantive changes.
SECTION 4. Amends Sections 12.151 and 12.152, Utilities Code, to delete
language prohibiting a person who is required to register as a lobbyist
under Chapter 305 (Registration of Lobbyists), Government Code, because of
the person's activities for compensation on behalf of a profession related
to the operation of PUC, from acting as general counsel to PUC. Makes
conforming changes.
SECTION 5. Amends Section 13.002, Utilities Code, which provides that the
Office of Public Utility Counsel (office) is subject to Chapter 325,
Government Code (Texas Sunset Act). Provides that unless continued in
existence as provided by that chapter, the office is abolished and this
chapter expires September 1, 2005, rather than September 1, 2001.
SECTION 6. Amends Section 13.003(a), Utilities Code, to authorize the
office to represent consumers in an alternative dispute resolution
proceeding. Authorizes the office to intervene or otherwise appear in a
judicial proceeding in which the counsellor determines that residential
electricity consumers or small commercial electricity consumers are in need
of representation.
SECTION 7. Amends Section 13.024, Utilities Code, as follows:
Sec. 13.024. PROHIBITED ACTS. (a) Prohibits a counsellor from having
direct or indirect interest in a utility company regulated under this
title, its parent, or its subsidiary companies, corporations, or
cooperatives or a utility competitor, utility supplier, or other entity
affected in a manner other than by the setting of rates for that class of
customer. Deletes language prohibiting the counsellor from providing legal
services directly or indirectly to or being employed in any capacity by a
utility company regulated under this title.
(b) Deletes language providing that the prohibition under Subsection (a)
applies until the second anniversary of the date the counselor ceases to
serve as counselor.
(c) Deletes language providing that this section does not prohibit a person
from engaging in the private practice of law after the person ceases to
serve as counselor.
SECTION 8. Amends Section 13.043, Utilities Code, as follows:
Sec. 13.043. PROHIBITION ON EMPLOYMENT OR REPRESENTATION. (a) Prohibits a
former counsel from communicating to or appearing before PUC or one of its
officers or employees before the second anniversary of the date the person
ceases to serve as counsel if the communication or appearance is made on
behalf of another person in connection with any matter on which the person
seeks official action or with the intent to influence PUC.
(b) Prohibits a former counsel from representing any person or receiving
compensation for services rendered on behalf of a person regarding a matter
before PUC before the second anniversary of the date the person ceases to
serve as counsel.
(c) Provides that a person commits a Class A misdemeanor if the person
violates this section.
(d) Prohibits an employee of the office from being employed by a public
utility that was in the scope of the employee's official responsibilities
while the employee was associated with the office, or from representing a
person before the PUC or a court in a matter in which the employee was
personally involved while associated with the office, or that was within
the employee's official responsibility while associated with the office.
(e) Redesignated from existing Subsection (b). Makes conforming and
nonsubstantive changes.
(f) Redesignated from existing Subsection (c). Makes conforming and
nonsubstantive changes.
(g) Provides that for purposes of this section "person" includes an
electric cooperative.
SECTION 9. Amends Section 14.101(d), Utilities Code, to provide that this
section (Report of Certain Transactions; Commission Consideration) does not
apply to transactions that facilitate unbundling, asset valuation,
minimization of ownership or control of generation assets, or other
purposes consistent with Chapter 39.
SECTION 10. Amends Sections 16.001(a) and (b), Utilities Code, to provide
that in order to defray expenses incurred in the administration of this
title, an assessment is imposed on each retail electric provider and
electric cooperative, in addition to each public utility, within the
jurisdiction of PUC that serves the ultimate consumer. Makes conforming
changes.
SECTION 11. Amends Section 31.002, Utilities Code, as follows:
Sec. 31.002. DEFINITIONS. Defines "affiliated power generation company,"
"affiliated retail electric provider," "aggregation," "customer choice,"
"Electric Reliability Council of Texas" or "ERCOT," "freeze period,"
"independent system operator," "power generation company," "power region,"
"retail customer," "retail electric provider," "separately metered," and
"transmission and distribution utility." Redefines "electric utility,"
"qualifying cogenerator," "qualifying small power producer," and
"transmission service." Redesignates existing Subsections (1) and (2) to
Subsections (6) and (7), respectively, and redesignates existing Subsection
(3) to Subsection (11). Redesignates existing Subsections (4)-(6) to
Subsections (13)-(15), respectively. Redesignates existing Subsection
(7) to Subsection (20).
SECTION 12. Amends Subchapter A, Chapter 32, Utilities Code, by adding
Section 32.0015, as follows:
Sec. 32.0015. REGULATION OF SUCCESSOR ELECTRIC UTILITY OR ELECTRIC
COOPERATIVE. Requires PUC, if an electric utility purchases, acquires,
merges, or consolidates with or acquires 50 percent or more of the stock of
an electric utility or electric cooperative, to regulate the successor
electric utility or electric cooperative in the same manner that it would
regulate the entity that was subject to the stricter regulation before the
purchase, acquisition, merger, or consolidation.
SECTION 13. Amends Sections 32.051 and 32.052, Utilities Code, to prohibit
PUC from regulating revenue requirements, rates, fuel costs, fuel charges,
or fuel acquisitions related to the generation and sale of electricity at
wholesale by a river authority operating a steam generating plant on or
before January 1, 1999, notwithstanding any other provision of this title.
Provides that a river authority operating a steam generating plant on or
before that date may construct improvements.
SECTION 14. Amends Section 32.053, Utilities Code, by amending Subsections
(b) and (f) and adding Subsections (g) and (h), as follows:
(b) Authorizes a corporation to purchase and sell electricity, at wholesale
only, to a purchaser, other than an ultimate consumer, at any location in
this state, notwithstanding other statutory provisions. Makes a
nonsubstantive change.
(f) Provides that the proceeds from the sale of bonds or other obligations,
the interest on which is tax-exempt and that are issued by a corporation or
river authority subject to this section, other than a bond or obligation
available to an investor-owned utility or exempt whole sale generator, may
not be used by the corporation to finance the construction or acquisition
of or the rebuilding or repowering of a facility for the generation of
electricity by the corporation. Deletes text related to the use of such
proceeds for these purposes in the past.
(g) Authorizes the board of directors of a river authority to sell, lease,
loan, or transfer some or all of the electric generation property of the
river authority to a nonprofit corporation authorized under this section or
Article 717p, Chapter 245, Acts of the 67th Legislature, Regular Session,
1981, V.T.C.S. (River Authorities Engaged in Distribution and Sale of
Electrical Energy), notwithstanding any other law. Requires the property
transfer to be made pursuant to terms and conditions approved by the board
of directors of the river authority.
(h) Provides that Subsections (a)-(f) do not apply to a corporation
created pursuant to Article 717p, V.T.C.S., Chapter 245, Acts of the 67th
Legislature, Regular Session, 1981, to serve an area described in Section
32.052.
SECTION 15. Amends Subchapter A, Chapter 33, Utilities Code, by adding
Section 33.008, as follows:
Sec. 33.008. FRANCHISE CHARGES. (a) Provides that following the end of
the freeze period for a municipality that has been served by an electric
utility, and following the date a municipally owned utility or an electric
cooperative has implemented customer choice for a municipality that has
been served by that municipally owned utility or electric cooperative, a
municipality is authorized to impose on an electric utility, transmission
and distribution utility, municipally owned utility, or an electric
cooperative, as appropriate, that provides distribution service within the
municipality a reasonable charge as specified in Subsection (b). Prohibits
a municipality from imposing a charge on certain enumerated entities.
(b) Provides that if a municipality collected a charge or fee for a
franchise to use a municipal street, alley, or public way from certain
utilities or an electric cooperative before the end of the freeze period,
the municipality, after the end of the freeze period or after
implementation of customer choice by the municipally owned utility or
electric
cooperative, as appropriate, is entitled to collect from each electric
utility, transmission and distribution utility, municipally owned utility,
or electric cooperative that uses the municipality's streets, alleys, or
public ways to provide distribution service a charge based on each kilowatt
hour of electricity delivered by the utility to each retail customer whose
consuming facility's point of delivery is located within the municipality's
boundaries. Requires the charge imposed to be equal to the total electric
franchise fee revenue due the municipality from certain utilities,
municipally owned utilities, and electric cooperatives for calendar year
1998 divided by the total kilowatt hours delivered during 1998 by the
applicable utilities, municipally owned utilities, or electric cooperatives
to retail customers whose consuming facilities' points of delivery were
located within the municipality's boundaries. Requires the compensation
that a municipality may collect from specified utilities, municipally owned
utilities, and electric cooperatives to be equal to the charge per
kilowatt-hour determined for 1998 multiplied times the number of
kilowatt-hours delivered within the municipality's boundaries.
(c) Requires the municipal finance charges authorized by this section to be
considered a reasonable and necessary operating expense of each utility and
electric cooperative subject to a charge under this section. Requires the
charge to be included in the nonbypassable delivery charges that a
customer's retail electric provider must pay under Section 39.107 to the
utility serving the customer.
(d) Provides that the municipal franchise charges are in lieu of any
franchise charges or fees payable under a franchise agreement in effect
before the expiration of the freeze period or, as appropriate, before the
implementation of customer choice by a municipally owned utility or
electric cooperative. Provides that except as otherwise provided, this
section does not affect a provision of a franchise agreement in effect
before the end of the freeze period or, as appropriate, before the
implementation of customer choice by a municipally owned utility or
electric cooperative.
(e) Authorizes a municipality to conduct an audit or other inquiry or to
pursue any cause of action in relation to the payment of charges by an
electric utility, transmission and distribution utility, municipally owned
utility, or an electric cooperative only if such audit, inquiry, or pursuit
of a cause of action concerns a payment made less than two years prior,
provided, however, that this subsection does not apply to an audit,
inquiry, or cause of action commenced before September 1, 1999. Requires
certain utilities, municipally owned utilities, or an electric cooperative,
on request of the municipality in connection with a municipal audit, to
identify the service provider and the type of service delivered for any
service in addition to electricity delivered directly to retail customers
through the utility's facilities located in the municipality's streets,
alleys, or public ways and for which the utility receives compensation.
(f) Provides that notwithstanding any other provision of this section, on
the expiration of a franchise agreement existing on September 1, 1999,
certain utilities, municipally owned utilities, or an electric cooperative
and a municipality are authorized to mutually agree to a different level of
compensation or to a different method for determining the amount the
municipality may charge for the use of a street, alley, or public way in
connection with the delivery of electricity at retail within the
municipality.
(g) Authorizes a newly incorporated municipality or a municipality that
has not previously collected compensation for the delivery of electricity
at retail within the municipality, after the end of the freeze period or
after implementation of customer choice by the municipally owned utility or
electric cooperative, to adopt and collect compensation based on the same
rate per kilowatt hour that is collected by any other municipality in the
same county that is served by the same utilities or electric cooperative.
(h) Defines "distribution service" as the delivery of electricity to all
retail customers.
SECTION 16. Amends Section 35.001, Utilities Code, to redefine "electric
utility," to include an electric cooperative as well as a municipally owned
utility.
SECTION 17. Amends Section 35.004, Utilities Code, as follows:
Sec. 35.004. PROVISION OF TRANSMISSION SERVICE. (a) Requires an electric
utility or transmission and distribution utility that owns or operates
transmission facilities to provide wholesale transmission service at rates
and terms, including terms of access, that are comparable to the rates and
terms of the utility's own use of its system.
(b) Requires PUC to ensure that an electric utility or transmission and
distribution utility provides nondiscriminatory access to wholesale
transmission service for qualifying facilities, exempt wholesale
generators, power marketers, power generation companies, retail electric
providers, and other electric utilities or transmission and distribution
utilities.
(c) Requires PUC, when an electric utility, electric cooperative, or
transmission and distribution utility provides wholesale transmission
service within the Electric Reliability Council of Texas (ERCOT), at the
request of a third party, to ensure that the utility recovers the utility's
reasonable costs in providing wholesale transmission services necessary for
the transaction from the entity for which the transmission is provided so
that the utility's other customers do not bear the costs of the service.
(d) Specifies the method that PUC is required to use in pricing wholesale
transmission services within ERCOT. Authorizes an electric utility subject
to the freeze period imposed by Section 39.052 to treat transmission costs
in excess of transmission revenues during the freeze period as an expense
for purposes of determining annual costs in the annual report filed
pursuant to Section 39.257. Authorizes PUC to approve wholesale rates that
may be periodically adjusted to ensure timely recovery of transmission
investment, notwithstanding Section 36.201.
(e) Requires PUC to ensure that ancillary services necessary to facilitate
the transmission of electric energy are available at reasonable prices with
terms and conditions that are not unreasonably preferential, prejudicial,
discriminatory, predatory, or anticompetitive. Defines "ancillary
services," as those necessary to facilitate the transmission of electric
energy. Lists certain ancillary services and authorizes PUC to adopt rules
to determine which services are ancillary services. Requires acquisition
of generation-related ancillary services on a nondiscriminatory basis by
the independent organization in ERCOT on behalf of the entities selling
electricity at retail, on the introduction of customer choice in the ERCOT
power region, to be deemed to meet the requirements of this subsection.
SECTION 18. Amends Section 35.005(b), Utilities Code, to authorize PUC to
require transmission service at wholesale, including the construction or
enlargement of a facility. Deletes language authorizing PUC to require
transmission service at wholesale, including the construction or
enlargement of a facility, in a proceeding not related to approval of an
integrated resource plan.
SECTION 19. Amends Section 35.033, Utilities Code, to authorize an
affiliate of an electric utility to be an exempt wholesale generator or
power marketer and to sell electric energy to its affiliated electric
utility in accordance with laws governing wholesale sales of electric
energy, rather than in accordance with Chapter 34 and other laws governing
wholesale sales of electric energy.
SECTION 20. Amends Section 35.034, Utilities Code, by adding Subsection
(c), to provide that for purposes of this section, "electric utility" does
not include a river authority.
SECTION 21. Amends Section 35.035, Utilities Code, by adding Subsection
(d), to provide that for purposes of this section, "electric utility" does
not include a river authority.
SECTION 22. Amends Subchapter C, Chapter 35, Utilities Code, by adding
Section 35.067, as follows:
Sec. 35.067. APPLICATION FOR RECERTIFICATION. Authorizes an electric
cooperative or a qualifying facility to submit to PUC for recertification
an agreement previously certified under Section 35.062 (Application of
Certification) or a predecessor statute if the agreement permits
recertification or the qualifying facility agrees to submission.
Authorizes PUC to deny recertification if PUC determines that a material
condition or fact on which PUC based the original certification has changed
or is no longer true.
SECTION 23. 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), acting on behalf of
the state, to sell or convey power directly to a public retail customer
regardless of whether the public retail customer is also classified as a
wholesale customer.
Sec. 35.103. ACCESS TO TRANSMISSION AND DISTRIBUTION SYSTEMS; RATES. (a)
Entitles the state to have access to all transmission and distribution
systems of all electric utilities, transmission and distribution utilities,
municipally owned utilities, and electric cooperatives that serve public
retail customers, except as provided in Section 35.104.
(b) Requires an entity described by Subsection (a) to provide any utility
service, including transmission, distribution, and other services, which
must include any applicable stranded costs or system benefit fees, to the
state at the lowest applicable rate charged for similar services to other
customers.
Sec. 35.104. LIMIT IN CERTAIN AREAS. Provides that Sections 35.102 and
35.103 do not apply to the rates, retail service area, facilities, or
public retail customers of a municipally owned electric utility or electric
cooperative that has not adopted customer choice. Prohibits the state from
engaging in retail transactions that exceed 2.5 percent of a retail
electric utility's total retail load in a certificated service area of an
electric utility in which customer choice has not been introduced.
Sec. 35.105. WHOLESALE CUSTOMERS. Provides that this subchapter does not
prevent the commissioner, acting on behalf of this state, from registering
as a power marketer.
SECTION 24. Amends Section 36.008, Utilities Code, to authorize PUC, in
establishing rates for an electric utility, rather than in establishing
rates for an electric utility not required to file an integrated resource
plan, to review the state's transmission system and make recommendations to
the utility regarding the need to build new power lines, upgrade power
lines, and make other necessary improvements and additions.
SECTION 25. Amends Section 36.052, Utilities Code, as follows:
Sec. 36.052. ESTABLISHING REASONABLE RETURN. Deletes language requiring
the regulatory authority, in establishing a reasonable return on invested
capital, to consider the efforts of the electric utility to comply with its
most recently approved integrated resource plan. Redesignates existing
Subsections (2)-(5) to Subsections (1)-(4).
SECTION 26. Amends Section 36.058(d), Utilities Code, to delete language
referring to affiliate transactions subject to Chapter 34 when authorizing
the PUC, in making findings regarding affiliate transactions, to determine
the extent to which the conditions and circumstances of that transaction
are reasonably comparable relative to quantity, terms, date of contract,
and place of delivery and allow for appropriate differences based on that
determination.
SECTION 27. Amends Section 36.201, Utilities Code, to delete the exception
permitted by Chapter 34 from the provision prohibiting PUC from
establishing a rate or tariff that authorizes an electric utility to
automatically adjust and pass through to the utility's customers a change
in the utility's fuel or other costs.
SECTION 28. Amends Section 36.204, Utilities Code, to delete language
limiting this section (Cost Recovery and Incentives) to an electric utility
that is not required to file an integrated resource plan.
SECTION 29. Amends Section 36.207, Utilities Code, to delete language
including mark-ups approved under Chapter 34 in the provisions of this
section (Use of Mark-ups).
SECTION 30. Amends Section 37.001, Utilities Code, to define "electric
utility," and redefine "retail electric utility," to include an electric
cooperative, and redesignate the text of existing Subsection (2) as (3).
SECTION 31. Amends Section 37.051, Utilities Code, by adding Subsection
(c), to provide that an electric cooperative is not required to obtain a
certificate of public convenience and necessity for the construction,
installation, operation, or extension of any generating facilities or
necessary interconnection facilities, notwithstanding any other provision
of this chapter
SECTION 32. Amends Section 37.054(b), Utilities Code, to authorize a
person or electric cooperative interested in an application for a
certificate of convenience and necessity to intervene at the hearing.
SECTION 33. Amends Subchapter B, Chapter 37, Utilities Code, by adding
Sections 37.060 and 37.061, as follows:
Sec. 37.060. DIVISION OF MULTIPLY CERTIFICATED SERVICE AREAS. (a)
Provides that this subsection and Subsections (b)-(g) apply only to areas
in which each retail electric utility that is authorized to provide retail
electric utility service to the area is providing customer choice.
Provides that, for purposes of this subsection, an electric cooperative or
a municipally owned electric utility is deemed to be providing customer
choice if it has approved a resolution adopting customer choice that is
effective on January 1, 2002, or effective within 24 months after the date
of the resolution adopting customer choice. Requires other retail electric
utilities to be deemed to be providing customer choice if customer choice
will be allowed for customers of the retail electric utility on January 1,
2002. Requires PUC, in areas in which each certificated retail electric
utility is providing customer choice, if requested by a retail electric
utility, to examine the service area of the retail electric utility making
the request that are also certificated to one or more other retail electric
utilities. Requires PUC, after notice and hearing, to amend the retail
electric utilities' certificates so that only one retail electric utility
is certificated to provide distribution services in any such area.
Authorizes a retail electric utility certificated to serve an area on June
1, 1999, to continue to serve the area or portion of the area under an
amended certificate.
(b) Provides that this section does not apply in an area in which a
municipally owned utility is certificated to provide retail electric
utility service, if the municipally owned utility serving the area files
with PUC, by February 1, 2000, a request that areas within the certificated
service area of the municipally owned utility remain as presently
certificated.
(c) Requires PUC to enter its order dividing multiply certificated areas
within one year of the date a request is received.
(d) Requires PUC, in amending certificates under this section, to take into
consideration the factors set out in Section 37.056.
(e) Requires PUC to revoke certificates to the extent necessary to achieve
the division of retail electric service areas as provided by this section,
notwithstanding Section 37.059.
(f) Requires that each retail electric utility be allowed to continue to
provide service to the location of electricity-consuming facilities it is
serving on the date an application for division of the affected mulitply
certificated service areas is filed, unless otherwise agreed by the
affected retail electric utilities. Prohibits a customer located within an
affected multiply certificated service area from switching from one retail
electric utility to another while an application for division is pending.
(g) Requires that if on June 1, 1999, retail service is being provided in
an area by another retail electric utility with the written consent of the
retail electric utility certificated to serve the area, that consent be
filed with PUC. Authorizes PUC, upon notification of such consent and a
request by an affected retail electric utility to amend the relevant
certificates, to grant an exception or amend a retail electric utility's
certificate. Prohibits this provision from being construed to limit the
PUC's authority to grant exceptions or to amend a retail electric utility's
certificate, upon request and notification, for areas to which retail
service is being provided pursuant to written consent granted dafter June
1, 1999.
(h) Prohibits PUC from granting an additional retail electric utility
certificate to serve an area if it would cause the area to be multiply
certificated, unless PUC finds that the certificate holders are not
providing service to any part of the area for which a certificate is sought
and are not capable of providing adequate service to the area. Provides
that neither this subsection nor the deadline of June 1, 1999, provided by
Subsection (a) apply to any application for multiple certification filed
with PUC on or before February 1, 1999, and authorizes such applications to
be processed in accordance with the applicable law in effect on the date
the application was filed. Prohibits applications for multiple
certification filed with PUC on or before February 1, 1999, from being
amended to expand the area for which a certificate is sought, except for
contiguous areas within municipalities that provide consent under Section
37.053(b), no later than June 1, 1999.
(i) Requires PUC, notwithstanding any other provision of this section and
if requested by a municipally owned utility, to examine areas within the
municipally owned utility's service area that are also certificated to one
or more other retail electric utilities. Authorizes PUC, after notice and
hearing, to amend the retail electric utilities' certificates so that only
one retail electric utility is certificated to provide distribution
services in the area, provided that certain conditions are met by PUC and
the municipality.
Sec. 37.061. EXISTING SERVICE AREA AGREEMENTS. (a) Requires PUC to allow a
municipally owned utility to amend the service area boundaries of its
certificate if:
(1) the municipally owned utility was the holder of a certificate as of
January 1, 1999;
(2) the municipally owned utility has an agreement existing before January
1, 1999, with a public utility serving the area that it would not contest
an application to amend the certificate to add municipal territory; and
(3) the area for which a certificate is requested is not certificated to a
retail electric utility that is not a party to the agreement and that has
not consented in writing to certification of the area to the municipality.
(b) Prohibits PUC from amending the certificate of the public utility
serving the affected area based upon the granting of a certificate to the
municipally owned utility.
SECTION 34. Amends Section 37.101(a), Utilities Code, to provide that if
an area is or will be included within a municipality as the result of
annexation, incorporation, or another reason, each electric cooperative,
in addition to each electric utility, that holds or is entitled to hold a
certificate to provide service or operate a facility in the area before the
inclusion has the right to continue to provide the service or operate the
facility and extend service within the utility's or cooperative's
certificated area in the annexed or incorporated area.
SECTION 35. Amends Section 38.001, Utilities Code, to require an electric
cooperative and an electric utility to furnish service, instrumentalities,
and facilities that are safe, adequate, efficient, and reasonable.
SECTION 36. Amends Section 38.004, Utilities Code, to provide that a
transmission or distribution line owned by an electric utility or an
electric cooperative must be constructed, operated, and maintained, as to
clearances, in the manner described by the National Electrical Safety Code
Standard ANSI (c)(2), as adopted by the American National Safety Institute
and in effect at the time of construction.
SECTION 37. Amends Subchapter A, Chapter 38, Utilities Code, by adding
Section 38.005, as follows:
Sec. 38.005. ELECTRIC SERVICE RELIABILITY MEASURES. (a) Requires PUC to
implement service quality and reliability standards relating to the
delivery of electricity to retail customers by electric utilities and
transmission and distribution utilities. Requires PUC, by rule, to develop
reliability standards including the system-average interruption frequency
index (SAIFI); the system-average interruption duration index (SAIDI);
achievement of average response time for customer service requests or
inquiries; or other reasonable and appropriate standards.
(b) Requires PUC to take appropriate enforcement action, including but not
limited to action against a utility if any feeder with 10 or more customers
appears on the utility's list of worst 10 percent performing feeders for
any two consecutive years or has a SAIDI or SAIFI average that is more than
300 percent greater than the system average of all feeders during any
two-year period, beginning in the year 2000.
(c) Requires the standards implemented under Subsection (a) to require each
electric utility and transmission and distribution utility subject to this
section to maintain adequately trained and experienced personnel throughout
the utility's service area so that the utility is able to fully and
adequately comply with the appropriate service quality and reliability
standards.
(d) Requires the standards to ensure that electric utilities do not neglect
any local neighborhood or geographic area, including rural areas,
communities of less than 1,000 persons, and low-income areas, with regard
to system reliability.
(e) Authorizes PUC to require each electric utility and transmission and
distribution utility to supply data to assist PUC in developing the
reliability standards.
(f) Obligates each electric utility, transmission and distribution utility,
electric cooperative, municipally owned utility, and generation provider to
comply with any operational criteria duly established by the independent
organization as defined by Section 39.151 or adopted by PUC.
SECTION 38. Amends Section 38.022, Utilities Code, to prohibit an electric
utility from discriminating against a person or electric cooperative who
sells or leases equipment or performs services in competition with the
electric utility.
SECTION 39. Amends Section 38.071, Utilities Code, to authorize PUC, after
notice and hearing, to order two or more electric utilities or electric
cooperatives to establish specified facilities for interconnecting service.
SECTION 40. Amends Subtitle B, Title 2, Utilities Code, by adding Chapters
39, 40, and 41 to read as follows:
CHAPTER 39. RESTRUCTURING OF ELECTRIC UTILITY INDUSTRY
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 39.001. LEGISLATIVE POLICY AND PURPOSE. (a)-(b) Sets forth
legislative findings, policy, and purpose.
(c) Prohibits regulatory authorities, excluding the governing body of a
municipally owned electric utility that has not opted for customer choice
or the body vested with power to manage and operate a municipally owned
electric utility that has not opted for customer choice, from making rules
or issuing orders regulating competitive electric services, prices, or
competitors, or restricting or conditioning competition except as
authorized in this title and from discriminating against any participant or
type of participant during the transition to a competitive market and in
the competitive market.
(d) Requires regulatory authorities, excluding the governing body of a
municipally owned electric utility that has not opted for customer choice
or the body vested with power to manage and operate a municipally owned
electric utility that has not opted for customer choice, to authorize or
order competitive rather than regulatory methods to achieve the goals of
this chapter to the greatest extent feasible and to adopt rules and issue
orders that are both practical and limited so as to impose the least impact
on competition.
(e) Requires that, in the event of judicial review of competition rules
adopted by the PUC to be conducted under Chapter 2001, Government Code,
except as otherwise provided by this chapter. Requires that in the event
of judicial review of the validity of competition rules to be commenced in
the court of appeals for the Third Court of Appeals District and to be
limited to the PUC's rulemaking record. Provides that the rulemaking
record consists of certain enumerated items.
(f) Provides that a person who challenges the validity of a competition
rule must file a notice of appeal with the court of appeals and serve the
notice on the PUC not later than the 15th day after the date on which the
rule as adopted is published in the Texas Register. Requires the notice of
appeal to designate the person challenging the rule as the appellant and
the PUC as the appellee. Requires PUC to prepare the rulemaking record and
file it with the court of appeals withing 30 days of the date the notice of
appeal is served on PUC. Requires the court of appeals to hear and
determine each appeal as expeditiously as possible with lawful precedence
over other matters. Requires the appellant and any person permitted to
intervene in support of the appellant's claims to file and serve briefs not
later than the 30th day after the date PUC files the rulemaking record.
Requires PUC and any person permitted to intervene in support of the rule
to file and serve briefs within 60 days after the date the appellant files
the appellant's brief. Authorizes the court of appeals, on its own motion
or on motion of any person for good cause, to modify the filing deadlines
prescribed by this subsection. Requires the court of appeals to render
judgment affirming the rule or reversing and , if appropriate on reversal,
remanding the rule to PUC for further proceedings, consistent with the
court's opinion and judgment. Provides that the Texas Rules of Appellate
Procedure apply to an appeal brought under this section to the extent not
inconsistent with this section.
Sec. 39.002. APPLICABILITY. Provides that this chapter, other than
Sections 39.155, 39.157(e), 39.203, 39.903, and 39.904, does not apply to a
municipally owned utility or an electric cooperative. Provides that
Sections 39.157(e), 39.203, and 39.904 apply only to a municipally owned
utility or an electric cooperative that is offering customer choice.
Provides that if there is a conflict between the specific provisions of
this chapter and any other provisions of this title other than Chapters 40
and 41, the provisions of this chapter control.
Sec. 39.003. CONTESTED CASES. Requires that, unless specifically provided
otherwise, each PUC proceeding under this chapter, other than a rulemaking
proceeding, report, notification, or registration, shall be conducted as a
contested case and provides that the burden of proof is on the incumbent
electric utility.
SUBCHAPTER B. TRANSITION TO COMPETITIVE RETAIL
ELECTRIC MARKET
Sec. 39.051. UNBUNDLING. (a) Requires each electric utility, on or
before September 1, 2000, to separate from its regulated utility activities
its customer energy services business activities that are otherwise also
already widely available in the competitive market.
(b) Requires each electric utility, not later than January 1, 2002, to
separate its business activities from one another into a power generation
company, a retail electric provider, and a transmission and distribution
utility.
(c) Authorizes an electric utility to accomplish the separation required by
Subsection (b) either through the creation of separate nonaffiliated
companies or separate affiliated companies owned by a common holding
company or through the sale of assets to a third party. Authorizes an
electric utility to create separate transmission and distribution
utilities.
(d) Requires each electric utility to unbundle in a manner that provides
for a separation of personnel, information flow, functions, and operations,
consistent with Section 39.157(d).
(e) Requires each electric utility to file with PUC a plan to implement
this section by January 10, 2000.
(f) Requires PUC, to adopt a utility's plan for business separation, adopt
the plan with changes, or reject the plan and require the utility to file a
new plan.
(g) Provides that transactions by electric utilities involving sales,
transfers, or other disposition of assets to accomplish the purposes of
this section are not subject to Section 14.101, 35.034, or 35.035.
Sec. 39.052. FREEZE ON EXISTING RETAIL BASE RATE TARIFFS. (a) Requires
an electric utility to provide retail electric service until January 1,
2002, within its certificated service area in accordance with the electric
utility's retail base rate tariffs in effect on September 1, 1999,
including its purchased power cost recovery factor.
(b) Prohibits an electric utility from increasing its retail base rates
above the rates provided by this section during the freeze period, except
for losses caused by force majeure as provided by Section 39.055.
(c) Prohibits, notwithstanding any other provision of this title, the
regulatory authority from reducing the retail base rates of an electric
utility during the freeze period, except as may be ordered as stipulated to
by an electric utility in a proceeding for which a final order had not been
issued by January 1, 1999.
(d) Provides that during the freeze period the retail base rates, overall
revenues, return on invested capital, and net income of an electric utility
are not subject to complaint, hearing, or determination as to
reasonableness.
(e) Requires an electric utility that has a rate proceeding pending before
PUC as of January 2, 1999, to provide service in accordance with the
tariffs approved in that proceeding from the date of approval until the end
of the freeze period.
(f) Provides that this section does not affect the authority of PUC to
fulfill its obligations under Section 39.262.
(g) Provides that this section does not deny a utility its right to have
PUC conduct proceedings and issue a final order pertaining to any matter
that may be remanded to PUC by a court having jurisdiction, except that the
final order may not affect the rates charged to customers during the freeze
period but shall be taken into account during the utility's true-up
proceeding under Section 39.262.
(h) Prohibits this title from being construed to prevent an electric
utility or a transmission and distribution utility from filing, and PUC
from approving, a change in wholesale transmission service rates during the
freeze period.
Sec. 39.053. COST RECOVERY ADJUSTMENTS. Provides that this subchapter
does not limit or alter the ability of an electric utility during the
freeze period to revise its fuel factor or to reconcile fuel expenses and
to either refund fuel overcollections or surcharge fuel undercollections to
customers, as authorized by its tariffs and Sections 36.203 and 36.205.
Sec. 39.054. RETAIL ELECTRIC SERVICE DURING THE FREEZE PERIOD. (a)
Requires an electric utility to provide retail electric service during the
freeze period in accordance with any contract terms applicable to a
particular retail customer approved by the regulatory authority and in
effect on December 31, 1998.
(b) Prohibits Sections 39.052(c) and (d) from being construed to restrict
any customer's right to complain during the freeze period to the regulatory
authority regarding the quality of retail electric service provided by the
electric utility or the applicability of an electric utility's particular
tariff to the customer.
(c) Prohibits this title from being construed to restrict an electric
utility, voluntarily and at its sole discretion, from offering new services
or new tariff options to its customers during the freeze period, consistent
with Section 39.051(a).
(d) Requires an offering of new services or tariff options under this
section to be equal to or greater than an electric utility's long-run
marginal cost and not be unreasonably preferential, prejudicial,
discriminatory, predatory, or anticompetitive.
(e) Requires revenue from any new offering under this section to be
accounted for in a manner consistent with Section 36.007.
Sec. 39.055. FORCE MAJEURE. (a) Authorizes an electric utility to
recover losses resulting from force majeure through an increase in its
retail base rates during the freeze period.
(b) Requires the regulatory authority, after a hearing to determine the
electric utility's losses from force majeure, to permit the utility to
fully collect any approved force majeure increase through an appropriate
customer surcharge mechanism, notwithstanding Subchapter C, Chapter 36.
(c) Defines "force majeure" as a major event or combination of major
events, including new or expanded state or federal statutory or regulatory
requirements, natural disasters, acts of war, terrorism, or civil
disturbance, beyond the control of an electric utility that the regulatory
authority finds increases the utility's total reasonable and necessary
nonfuel costs or decreases the utility's total nonfuel revenues related to
the generation and delivery of electricity by more than 10 percent for any
calendar year during the freeze period. Provides that the term does not
include any changes in general economic conditions such as inflation,
interest rates, or other factors of general application.
SUBCHAPTER C. RETAIL COMPETITION
Sec. 39.101. CUSTOMER SAFEGUARDS. (a) Requires PUC, before retail
competition begins on January 1, 2002, to ensure that retail customer
protections are established that entitle a customer to specified
protections relating to safe, reliable, and reasonably priced electricity,
privacy, clear billing formats, billing options, discrimination, metering
and billing accuracy, and access to certain information.
(b) Entitles a customer to specified items relating to access to certain
information about the transition to competition, choices in selecting an
electric provider, access to energy efficient services, on-site generation
and renewable energy; access to a provider of last resort; information to
make an informed choice of provider; protection from unfair and deceptive
practices, and impartial and prompt resolution of disputes.
(c) Prohibits a retail electric provider, power generation company,
aggregator, or other entity that provides retail electric service from
discriminating in the provision of electric service or electric generation
service to any customer because of race, creed, color, national origin,
ancestry, sex, marital status, lawful source of income, disability, or
familial status. Prohibits a retail electric provider, power generation
company, aggregator, or other entity that provides retail electric service
from refusing to provide service to a customer because the customer is
located in an economically distressed geographic area or qualifies for
low-income affordability or energy efficiency services. Requires PUC to
require a provider to comply with this subsection as a condition of
certification or registration.
(d) Requires a retail electric provider, power generation company,
aggregator, or other entity that provides retail electric service to submit
reports to PUC and the office annually and on request relating to the
person's compliance with this section. Requires PUC, by rule, to specify
the form in which a report must be submitted. Provides that a report must
include information regarding the extent of the person's coverage;
information regarding the service provided, compiled by zip code and census
tract; and any other information PUC or the office considers relevant to
determine compliance.
(e) Authorizes PUC to adopt and enforce such rules as necessary or
appropriate to carry out Subsections (a)-(d). Provides that PUC has
jurisdiction over all providers of electric service in enforcing
Subsections (a)-(d) and is authorized to assess civil and administrative
penalties under Section 15.023 and seek civil penalties under Section
15.028.
(f) Requires PUC, on or before June 30, 2001, to modify its current rules
regarding customer protections to ensure that at least the same level of
customer protection against potential abuses and the same quality of
service that exists on December 31, 1999, is maintained in a restructured
electric industry.
(g) Requires compliance with Subsections (a)-(e) by a provider of electric
service which is a municipally owned utility to be administered solely by
the governing body of the municipally owned utility, which is required to
adopt, implement, and enforce rules having the effect of accomplishing the
objectives of Subsections (a)-(e). Requires reports containing the
information required by Subsection (d) to be filed by the municipally owned
utility with the governing body.
Sec. 39.102. RETAIL CUSTOMER CHOICE. (a) Requires each retail customer
in the state to have customer choice on and after January 1, 2002, except
retail customers of electric cooperatives and municipally owned utilities
that have not opted for customer choice.
(b) Authorizes the affiliated retail electric provider of the electric
utility serving a retail customer on December 31, 2001, to continue to
serve that customer until the customer chooses a different retail electric
provider, an electric cooperative offering customer choice, or a
municipally owned utility offering customer choice.
(c) Provides that an electric utility that has a systemwide freeze for
residential and commercial customers in effect September 1, 1997, and
extending beyond December 31, 2001, that has been found by a regulatory
authority to be in the public interest, is not subject to this chapter.
Provides that the utility is subject to the provisions of this chapter at
the expiration of the utility's freeze period, and, at that time, has no
claim for stranded cost recovery
Sec. 39.1025. LIMITATIONS ON TELEPHONE SOLICITATION. Prohibits a person
from making or causing to be made a telephone solicitation to an
electricity customer who has given notice to PUC of the customer's
objection to receiving telephone solicitations relating to the customer's
choice of retail electric providers. Requires PUC to establish and provide
for the operation of a database to compile a list of customers who object
to receiving telephone solicitation. Authorizes PUC to operate the
database or contract with another entity to operate the database.
Authorizes PUC to set the fee, which may not be more than $5, for inclusion
in the database.
Sec. 39.103. COMMISSION AUTHORITY TO DELAY COMPETITION AND SET NEW RATES.
Requires PUC, upon its determination that a power region is unable to offer
fair competition and reliable service to all retail customer classes on
January 1, 2002, to delay customer choice for the power region and
authorizes PUC, on or after January 1, 2002, to establish new rates for all
electric utilities in the power region as provided by Chapter 36.
Sec. 39.104. CUSTOMER CHOICE PILOT PROJECTS. (a) Authorizes the use of
customer choice pilot projects to allow PUC to evaluate the ability of each
power region and electric utility to implement customer choice. Prohibits
an electric utility in a multiply certificated area from including
customers that were served by an electric cooperative or a municipally
owned utility on May 1, 1999.
(b) Requires PUC to require each electric utility to offer customer choice
in its service area within this state amounting to five percent of the
utility's combined load of all customer classes within this state beginning
on June 1, 2001.
(c) Requires distribution of the load designated for customer choice under
this section to all customer classes of a utility consistent with the
purpose of this section and subject to PUC approval.
(d) Authorizes customers participating in a pilot project to buy electric
energy from any retail electric provider certified by PUC under Section
39.352, including an affiliated retail electric provider. Prohibits a
retail electric provider from participating in a pilot project in the
certificated service area served by the electric utility with which it is
affiliated.
(e) Requires each utility operating a pilot project to charge residential
and small commercial customers in accordance with Section 39.052.
(f) Authorizes PUC to prescribe reporting requirements it considers
necessary to evaluate a pilot project consistent with the purpose of this
section.
(g) Requires customers having customer choice under this section to be
billed as provided by Section 39.107.
(h) Authorizes PUC to prescribe terms and conditions it considers necessary
to prohibit anticompetitive practices and to encourage customer choice
offered under this section.
(i) Provides that a retail electric provider participating in a pilot
project under this section is not an electric utility or a retail electric
utility, notwithstanding any other provision of this title.
(j) Requires 20 percent of the load designated for customer choice under
this section to be initially set aside for aggregated loads.
Sec. 39.105. LIMITATION ON SALE OF ELECTRICITY. (a) Prohibits a
transmission and distribution utility, after January 1, 2002, from selling
electricity or participating in the market for electricity, except to buy
electricity to serve its own needs.
(b) Prohibits a person or retail electric utility from providing,
furnishing, or making available electric service at retail within the
certificated service area of an electric cooperative that has not adopted
customer choice or a municipally owned utility that has not adopted
customer choice. Provides that this subsection does not prohibit the
provision of electric service in multiply certificated service areas to
customers of any other retail electric utility.
Sec. 39.106. PROVIDER OF LAST RESORT. (a) Requires PUC to designate
retail electric providers in areas of the state in which customer choice is
in effect to serve as providers of last resort.
(b) Requires a provider of last resort to offer a standard retail service
package for each class of customers designated by PUC at a fixed,
nondiscountable rate approved by PUC.
(c) Requires a provider of last resort to provide the standard retail
service package to any requesting customer in the territory for which it is
the provider of last resort.
(d) Requires PUC, no later than June 1, 2001, to designate the provider or
providers of last resort.
(e) Requires PUC to determine the procedures and criteria, which may
include the solicitation of bids, for designating a provider or providers
of last resort. Authorizes PUC to redesignate the provider of last resort
according to a schedule it considers appropriate.
(f) Authorizes PUC, in the event that no retail electric provider applies
to be the provider of last resort for a given area of the state on
reasonable terms and conditions, to require a retail electric provider to
become the provider of last resort as a condition of receiving or
maintaining a certificate under Section 39.352.
(g) Requires the provider of last resort, in the event that a retail
electric provider fails to serve any or all of its customers, to offer each
such customer the standard retail service package for that customer class
with no interruption of service to any customer.
Sec. 39.107. METERING AND BILLING SERVICES. (a) Requires metering
services, on the introduction of customer choice in a service area, to
continue to be provided by the transmission and distribution utility
affiliate of the electric utility that was serving the area prior to the
introduction of customer choice. Requires that metering services provided
to commercial and industrial customers be provided on a competitive basis
beginning on January 1, 2004.
(b) Requires metering and billing services provided to residential
customers to continue to be provided by the transmission and distribution
utility affiliate of the electric utility that was serving the area before
the introduction of customer choice until the later of September 1, 2005,
or the date on which at least 40 percent of those residential customers are
taking service from unaffiliated retail electric providers. Requires
metering and billing services provided to residential customers to be
governed by the customer safeguards adopted by PUC under Section 39.101.
(c) Requires tenants of leased or rented property that is separately
metered, beginning on the date of introduction of customer choice in a
service area, to have the right to choose a retail electric provider, an
electric cooperative offering customer choice, or a municipally owned
utility offering customer choice, and requires the owner of the property to
grant reasonable and nondiscriminatory access to transmission and
distribution utilities, retail electric providers, electric cooperative,
and municipally owned utilities for metering proposes.
(d) Requires a transmission and distribution utility, or an electric
cooperative or municipally owned utility providing the customer's energy
requirements, beginning on the date of introduction of customer choice in a
service area, to bill a customer's retail electric provider for
nonbypassable delivery charges as determined under Section 39.201. Provides
that the retail electric provider or the electric cooperative or
municipally owned utility must pay these charges.
(e) Authorizes a transmission and distribution utility to bill retail
customers at the request of a retail electric provider or, if an electric
cooperative or municipally owned utility is providing the customer's energy
requirements, at the request of the electric cooperative or municipally
owned utility. Requires a transmission and distribution utility that
provides billing service on such request to offer billing service on
comparable terms and conditions to any other requesting retail electric
provider, or, as applicable, the electric cooperative or municipally owned
utility providing energy requirements to a customer served by the
transmission and distribution utility.
(f) Requires charges for metering and billing services to comply with
rules adopted by PUC relating to nondiscriminatory rates of service,
beginning on the date of introduction of customer choice in a service area.
(g) Prohibits metered electric service sold to residential customers on a
prepaid basis from being sold at a price that is higher than the price
charged by the provider of last resort.
Sec. 39.108. CONTRACTUAL OBLIGATIONS. Prohibits this chapter from:
(1) interfering with or abrogating the rights or obligations of any party,
including a retail or wholesale customer, to a contract with an
investor-owned electric utility, river authority, municipally owned
utility, or electric cooperative;
(2) interfering with or abrogating the rights or obligations of a party
under a contract or agreement concerning certificated utility service
areas; or
(3) resulting in a change in wholesale power costs to wholesale customers
in Texas purchasing electricity under wholesale power contracts the pricing
provisions of which are based on formulary rates, fuel adjustments, or
average system costs.
Sec. 39.109. NEW OWNER OR SUCCESSOR. Requires PUC to require a generating
facility that is transferred to a new owner or successor in interest
between June 1, 1999, and January 1, 2002, to continue to be operated and
maintained by the same operating personnel for not less than two years,
except the personnel may be dismissed for cause. Requires this section to
apply only if the facility is actually operated during the two-year period
after the sale. Prohibits this section from requiring that the purchaser
cause the facility to be operated in whole or in part, or precluding a
temporary closure of the facility during the two-year period. Prohibits
this section from creating any obligation extending after the two-year
period following the sale.
SUBCHAPTER D. MARKET STRUCTURE
Sec. 39.151. ESSENTIAL ORGANIZATIONS. (a) Provides that a power region
must establish one or more independent organizations to perform specified
functions.
(b) Defines "independent organization" as an independent system operator
or other person that is sufficiently independent of any producer or seller
of electricity that its decisions will not be unduly influenced by any
producer or seller. Provides that an entity is deemed to be independent if
it is governed by a board that has three representatives from each segment
of the electric market, with the consumer segment being represented by one
residential customer, one commercial customer, and one industrial retail
customer.
(c) Requires PUC to certify an independent organization or organizations to
perform the functions set out in this section.
(d) Requires an independent organization certified by PUC for a power
region to establish and enforce procedures, consistent with this title and
PUC's rules, relating to the reliability of the regional electrical network
and accounting for the production and delivery of electricity among
generators and all other market participants. Provides that the procedures
are subject to PUC oversight and review.
(e) Authorizes PUC to authorize an independent organization that is
certified under this section to charge a reasonable and competitively
neutral rate to wholesale buyers and sellers to cover the independent
organization's costs.
(f) Authorizes PUC, in implementing this section, to cooperate with the
utility regulatory commission of another state or the federal government
and to hold a joint hearing or make a joint investigation with that
commission.
(g) Provides that if it amends its governance rules to provide that its
governing body is composed as prescribed by this subsection, the existing
independent system operator in ERCOT will meet the criteria provided by
Subsection (a) with respect to ensuring access to the transmission systems
for all buyers and sellers of electricity in the ERCOT region and ensuring
the reliability of the regional electrical network. Provides that to
comply with this subsection, the governing body must be composed of certain
members.
(h) Authorizes the ERCOT independent system operator to meet the criteria
relating to the other functions of an independent organization provided by
Subsection (a) by adopting procedures and acquiring resources needed to
carry out those functions.
(i) Authorizes PUC to delegate authority to the existing independent
system operator in ERCOT to enforce operating standards within the ERCOT
regional electrical network and to establish and oversee transaction
settlement procedures. Authorizes PUC to establish the terms and
conditions for the ERCOT independent system operator's authority to oversee
utility dispatch functions after the introduction of customer choice.
(j) Requires a retail electric provider, municipally owned utility,
electric cooperative, power marketer, transmission and distribution
utility, or power generation company to observe all scheduling, operating,
planning, reliability, and settlement policies, rules, guidelines, and
procedures established by the independent system operator in ERCOT.
Provides that a failure to comply with this subsection may result in the
revocation, suspension, or amendment of a certificate or the imposition of
an administrative penalty.
(k) Authorizes PUC to delegate authority to an independent organization
outside of ERCOT, consistent with Subsection (i), to the extent it has
authority over an independent organization outside of ERCOT.
(l) Prohibits operational criteria, protocols, or requirements established
by an independent organization, including the ERCOT independent system
operator, from adversely affecting or impeding any manufacturing or other
internal process operation associated with an industrial generation
facility, except to the minimum extent necessary to assure reliability of
the transmission network.
(m) Requires a power region outside of ERCOT to be deemed to have met the
requirement to establish an independent organization to perform the
transmission functions specified in Subsection (a) if the Federal Energy
Regulatory Commission has approved a regional transmission organization for
the region and found that the regional transmission organization meets the
requirements of Subsection (a).
Sec. 39.152. QUALIFYING POWER REGIONS. (a) Requires PUC to certify a
power region if a sufficient number of interconnected utilities in the
power region fall under the operational control of an independent
organization as described by Section 39.151; the power region has a
generally applicable tariff that guarantees open and nondiscriminatory
access for all users to transmission and distribution facilities in the
power region as provided by Section 39.203; and no person owns and controls
more than 20 percent of the installed generation capacity located in or
capable of delivering electricity to a power region.
(b) Requires PUC, in determining whether a power region not entirely
within the state meets the requirements of this section, to consider the
extent to which the available transmission facilities limit the delivery of
electricity from generators located outside the state to areas of the power
region within the state.
(c) Requires the requirements of Subsection (a)(2) for a power region
outside of ERCOT to be deemed to have been met if power aggregating to
approximately 50,000 megawatts can be delivered to the portion of the power
region that is in this state through the payment of not more than one
transmission tariff.
(d) Authorizes a power generation company that is affiliated with an
electric utility, for a power region outside of ERCOT, to elect to
demonstrate that it meets the requirements of Subsection (a)(3) by showing
that it does not own and control more than 20 percent of the installed
capacity in a geographic market that includes the power region, using the
guidelines, standard, and methods adopted by the Federal Energy Regulatory
Commission.
(e) Provides that in a power region outside of ERCOT, if customer choice
is introduced before fulfillment of Subsection (a) requirements, an
affiliated retail electric provider is prohibited from competing for retail
customers in any area of the power region that is within this state and
outside of the affiliated transmission and distribution utility's
certificated service area unless the affiliated power generation company
makes a commitment to maintain and does maintain rates that are based on
cost of service for any electric cooperative or municipal utility that was
a wholesale customer on January 1, 1999, and was purchasing power at rates
that were based on cost of service. Requires a power generating company to
sell power at rates that are based on cost of service, notwithstanding the
expiration of a contract for that service, until the requirements of
Subsection (a) are met.
(f) Provides that if PUC determines that the available transmission
facilities limit the delivery of electricity from generators located
outside this state to areas of the power region within this state and that
the requirements of Subsection (a) have not been met for that region, any
utility-affiliated power generation company in the power region is required
to maintain adequate supply and facilities to provide electric service to
persons who were or would have been retail customers of the affiliated
retail electric provider on December 31, 2001. Provides that the
obligation provided by this subsection remains in effect until PUC
determines that the available transmission facilities do not limit the
delivery of electricity from generators located outside this state to the
power region or that the requirements of Subsection (a) have been met for
the region.
Sec. 39.153. CAPACITY AUCTION. (a) Requires each electric utility subject
to this section to sell at auction entitlements to at least 15 percent of
the electric utility's Texas jurisdictional installed generation capacity
at least 60 days before the date set for customer choice to begin.
Provides that in this section the term "electric utility" includes any
affiliated power generation company that is unbundled from the electric
utility in accordance with Section 39.051, and does not include any entity
owning less than 400 megawatts of installed generation capacity.
(b) Requires the obligation to auction the entitlements to continue until
the earlier of 60 months after the date customer choice is introduced or
the date PUC determines that 40 percent or more of the electric power
consumed by residential and small commercial customers within the
affiliated transmission and distribution utility's certificated service
area before the onset of customer choice is provided by nonaffiliated
retail electric providers.
(c) Prohibits an affiliate of the electric utility selling entitlements in
the auction from purchasing entitlements from the affiliated electric
utility at the auction. Authorizes the purchase of entitlements only by
entities lawfully able to sell electricity in Texas.
(d) Authorizes an electric utility to choose to auction additional
entitlements beyond those required by Subsection (a) or continue to auction
entitlements after the period required by Subsection (b) in order to comply
with Section 39.154.
(e) Requires PUC to adopt rules by December 31, 2000, that define the
scope of the capacity entitlements to be auctioned. Authorizes the auction
of entitlements in blocks of less than 15 percent. Requires the rules to
state the minimum amount of capacity that can be sold at auction as an
entitlement. Requires the rules to provide that the entitlements:
(1) may be sold and purchased in periods of no less than one month nor
more than four years;
(2) may be resold to any lawful purchaser, except for a retail electric
provider affiliated with the electric utility that originally auctioned the
entitlement;
(3) include no possessory interest in the unit from which the power is
produced;
(4) include no obligations of a possessory owner of an interest in the
unit from which the power is produced; and
(5) give the purchaser the right to designate the dispatch of the
entitlement, subject to planned outages, outages beyond the control of the
utility operating the unit, and other considerations subject to the
oversight of the applicable independent organization.
(f) Requires PUC to adopt rules by December 31, 2000, that prescribe the
procedure for the auction of the entitlements. Requires the rules to
include:
(1) a process for conducting the auction or auctions, including who shall
conduct it, how often it shall be conducted, and how winning bidders shall
be determined;
(2) a process for the electric utility to designate which generation units
or combination of units are offered for auction;
(3) a provision for the utility to establish an opening bid price based
upon the electric utility's expected cost, with PUC prescribing the means
for determining the opening bid price, which may not include return on
equity; and
(4) a provision that allows a bidder to specify the magnitude and term of
the entitlement, subject to the conditions established in Subsection (e).
(g) Requires PUC, in adopting the process under Subsection (f)(2), to
consider the furtherance of the development of the competitive market, the
cost of transmission, physical constraints of the transmission system, the
proximity of the generation to load, economic efficiency, and such other
factors as PUC finds relevant. Authorizes the process to provide for PUC
approval of the designation prior to auction. Authorizes PUC to consult
with the applicable independent organization to develop the process.
Sec. 39.154. LIMITATION OF OWNERSHIP OF INSTALLED CAPACITY. (a) Prohibits
a power generation company from owning and controlling more than 20 percent
of the installed generation capacity located in, or capable of delivering
electricity to, a power region, beginning on the date of introduction of
customer choice.
(b) Authorizes PUC to waive or modify the requirement in Subsection (a) in
a power region not entirely within the state upon a finding of good cause.
(c) Requires PUC, in determining the percentage shares of installed
generation capacity under this section, to combine capacity owned and
controlled by a power generation company and any entity that is affiliated
with that power generation company within the power region, reduced by the
installed generation capacity of those facilities that are made subject to
capacity entitlements auctions under Sections 39.153 (a) and (d).
(d) Defines "installed generation capacity."
(e) Requires PUC, in determining the percentage shares of installed
generation capacity owned and controlled by a power generation company for
purposes of calculating the numerator, to reduce the installed generation
capacity owned and controlled by that power generation company by the
installed generation capacity of any "grandfathered facility" within an
ozone nonattainment area as of September 1, 1999, for which that power
generation company has commenced complying or made a binding commitment to
comply with Section 39.264.
Sec. 39.155. COMMISSION ASSESSMENT OF MARKET POWER. (a) Requires each
person, municipally owned utility, electric cooperative, and river
authority that owns generation facilities and offers electricity for sale
in this state to report to PUC its installed generation capacity, the total
amount of capacity available for sale to others, the total amount of
capacity under contract to others, the total amount of capacity dedicated
to its own use, its annual wholesale power sales in the state, its annual
retail power sales in the state, and information necessary for PUC to
assess market power or the development of a competitive retail market in
the state. Requires PUC, by rule, to prescribe the nature and detail of
such reporting requirements and to administer those reporting requirements
in a manner that ensures the confidentiality of competitively sensitive
information.
(b) Requires the ERCOT independent system operator to submit an annual
report to PUC identifying existing and potential transmission and
distribution constraints and system needs within ERCOT, alternatives for
meeting system needs, and recommendations for meeting system needs.
Requires submission of the first report on or before October 1, 1999.
Requires submission of subsequent reports by January 15 of each year or as
determined necessary by PUC.
(c) Requires each electric utility owning transmission and distribution
facilities in a power region other than ERCOT, before the date of
introduction of customer choice in that power region, to submit an annual
report to PUC identifying existing and potential transmission and
distribution constraints and system needs in the power region, alternatives
for meeting system needs, and recommendations for meeting system needs as
directed by PUC.
(d) Requires the submission of required reports by the independent
organization or organizations having authority over the power region or
discrete areas thereof.
Sec. 39.156. MARKET POWER MITIGATION PLAN. (a) Provides that "market
power mitigation plan" or "plan" means a written proposal by an electric
utility or a power generation company for reducing its ownership and
control of installed generation capacity as required by Section 39.154.
(b) Requires an electric utility or power generation company owning and
controlling more than 20 percent of the generation capacity located in, or
capable of delivering electricity to, a power region to file a market power
mitigation plan with PUC no later than December 1, 2000.
(c) Authorizes the plan to provide for the sale of generation assets to an
nonaffiliated person; the exchange of generation assets with an
unaffiliated person located in a different power region; the auctioning of
generation capacity entitlements; the sale of the right to capacity to a
nonaffiliated person for at least four years; or any reasonable method of
mitigation.
(d) Provides that for the purposes of this section, generation capacity is
the net of the generation capacity subject to an auction under Section
39.153.
(e) Requires the plan to be in a form prescribed by PUC and to provide
information PUC finds reasonably necessary to evaluate the plan.
(f) Requires PUC to approve, modify, or reject a plan within 180 days
after the date of a filing under Subsection (b). Prohibits PUC from
modifying a plan to require divestiture by the electric utility or the
power generation company.
(g) Requires PUC, in reaching its determination under Subsection (f), to
consider the degree to which the electric utility's or power generation
company's stranded costs, if any, are minimized; whether on disposition of
the generation assets the reasonable value is likely to be received; the
effect of the plan on the electric utility's or power generation company's
federal income taxes; the effect of the plan on current and potential
competitors in the generation market; and whether the plan is consistent
with the public interest.
(h) Authorizes an electric utility or power generation company with an
approved mitigation plan to request to amend or repeal its plan. Requires
PUC to modify or repeal an electric utility's or power generation company's
mitigation plan, upon a showing of good cause.
(i) Authorizes PUC, if an electric utility's or a power generation
company's market power mitigation plan is not approved before January 1 of
the year it is to take effect, to order the electric utility or power
generation company to auction generation capacity entitlements of any
capacity exceeding the maximum allowable capacity prescribed by Section
39.154, subject to PUC approval, and until such time a mitigation plan is
approved.
(j) Requires an auction to be held no later than 60 days after the order
is entered.
Sec. 39.157. COMMISSION AUTHORITY TO ADDRESS MARKET POWER. (a) Requires
PUC to monitor market power associated with the generation, transmission,
distribution, and sale of electricity in this state. Requires PUC, on a
finding that market power abuses or other violations of this section are
occurring, to require reasonable mitigation of the market power through the
specified methods. Provides that Section 15.024(c) does not apply to an
administrative penalty imposed under this section. Provides that for
purposes of this subchapter, market power abuses are practices by persons
possessing market power that are unreasonably discriminatory or tend to
unreasonably restrict, impair, or reduce the level of competition. Defines
"market power" for purposes of this section, to include predatory pricing,
withholding of production, precluding entry, and collusion. Provides that
a violation of the code of conduct provided by Subsection (d) that
materially impairs the ability of a person to compete in a competitive
market shall be deemed to be an abuse of market power. Provides that the
possession of a high market share in a market open to competition may not,
of itself, be deemed to be an abuse of market power; and further provides
that this sentence shall not affect the application of state and federal
antitrust laws.
(b) Prohibits a person that owns generation facilities, beginning on the
date of introduction of customer choice, from owning transmission or
distribution facilities in this state except for those facilities necessary
to interconnect a generation facility with the transmission or distribution
network, a facility not dedicated to public use, or a facility otherwise
excluded from the definition of electric utility under Section 31.002.
Provides that this chapter does not prohibit a power generation company
affiliated with a transmission and distribution utility from owning
generation facilities.
(c) Requires PUC to monitor market shares of installed capacity to ensure
that the limitations in Section 39.154 are not exceeded. Requires PUC, if
it finds that a person has violated a limitation in Section 39.154, to
order the person to file a market power mitigation plan consistent with the
requirements in Section 39.156 within 60 days of the date of the order.
(d) Requires PUC, not later than January 10, 2000, to adopt rules and
enforcement procedures to govern transactions or activities between a
transmission and distribution utility and its competitive affiliates to
avoid potential market power abuses and cross-subsidizations between
regulated and competitive activities both during the transition to and
after the introduction of competition. Provides that nothing in this
subsection is intended to affect or modify the obligations or duties
relating to any rules or standards of conduct that may apply to a utility
or the utility's affiliates under orders or regulations of the Federal
Energy Regulatory Commission or the Securities and Exchange Commission.
Authorizes a utility that is subject to statutes or regulations in other
states that conflict with a provision of this section to petition PUC for a
waiver of the conflicting provision on a showing of good cause. Requires
the rules under this section to ensure certain enumerated points.
(e) Requires PUC to establish, by rule, a code of conduct that must be
observed by electric cooperatives and municipally owned utilities and their
affiliates to protect against anticompetitive practices. Requires the
rules adopted by PUC to be consistent with Chapters 40 and 41, and
prohibits the rules from being more restrictive than the rules adopted
under Subsection (d).
(f) Requires PUC, following review of the annual report submitted to it
under Sections 39.155(b) and (c), to determine whether specific
transmission or distribution constraints or bottlenecks within this state
give rise to market power in specific geographic markets in the state.
Authorizes PUC, on a finding that specific transmission or distribution
constraints or bottlenecks within this state give rise to market power, to
order reasonable mitigation of that potential market power by ordering
under Section 39.203(e) one or more electric utilities or transmission and
distribution utilities to construct additional transmission or distribution
capacity, or both, subject to the certification provisions of this title.
(g) Prohibits the sharing of corporate support services in accordance with
this section from allowing or providing a means for the transfer of
confidential information from a utility to an affiliate, creating the
opportunity for preferential treatment or an unfair competitive advantage,
leading to customer confusion, or creating significant opportunities for
cross-subsidization of affiliates.
(h) Prohibits a utility or competitive affiliate from circumventing the
provisions of Subsection (d) by using any utility affiliate to provide
information, service, or subsidies between the utility and a competitive
affiliate.
(i) Defines "competitive affiliate" and "corporate support services."
Provides examples of services that may be shared and services that may not
be shared.
Sec. 39.158. MERGERS AND CONSOLIDATIONS. (a) Requires an owner of
electric generation facilities that offers electricity for sale in the
state and proposes to merge, consolidate, or otherwise become affiliated
with another owner of electric generation facilities that offers
electricity for sale in this state to obtain PUC approval prior to closing
if the electricity offered for sale in the power region by the merged
consolidated, or affiliated entity will exceed one percent of the total
electricity for sale in the power region. Requires the request of such
approval at least 120 days prior to the proposed closing. Requires PUC to
approve the transaction unless it finds that the transaction results in a
violation of Section 39.154, in which case PUC is authorized to condition
approval on adoption of reasonable modifications to the transaction as
prescribed by PUC to mitigate potential market power abuses.
(b) Prohibits this chapter from being construed to confer immunity from
state or federal antitrust laws. Establishes that this chapter is intended
to complement other state and federal antitrust provisions and authorizes
the utilization of antitrust remedies in state or federal court to remedy
anticompetitive activities.
(c) Prohibits this section from being deemed to authorize PUC review or
approval of transactions entered into between or among municipally owned
utilities, river authorities, special districts created by law, or other
political subdivisions, whether or not such transactions are characterized
as mergers, consolidations, or other affiliations, when the transaction is
authorized or structured pursuant to state law.
SUBCHAPTER E. PRICE REGULATION AFTER COMPETITION
Sec. 39.201. COST OF SERVICE TARIFFS AND CHARGES. (a) Requires each
electric utility to file proposed tariffs for its proposed transmission and
distribution utility on or before April 1, 2000.
(b) Requires the filing to include supporting cost data for determination
of nonbypassable delivery charges and specifies the method by which to
determine that sum.
(c) Requires each electric utility to identify the unbundled generation and
retail energy service costs by customer class.
(d) Requires PUC, in accordance with a schedule and procedures it
establishes, to hold a hearing and approve or modify and make effective as
of January 1, 2002, the transmission and distribution utility's proposed
tariffs for transmission and distribution services, the system benefit fund
charge, and the expected competition transition charge as determined under
Subsections (g) and (h) and as implemented under Subsections (i)-(l).
(e) Requires the system benefit fund fee to be that which is established
by PUC pursuant to Section 39.903.
(f) Requires the expected competition transition charge to be determined
under Subsections (g) and (h) and implemented under Subsections (i)-(l).
(g) Specifies the formula required to calculate the expected competition
transition charge.
(h) Requires the electric utility to use the ECOM administrative model to
estimate stranded costs. Provides that the model must include updated
company-specific inputs. Provides that natural gas prices used in the model
must be market-based natural gas forward prices, where available. Requires
growth rates in generating plant operations and maintenance costs and
allocated administrative and general costs to be benchmarked by comparing
those costs to the best available information on cost trends for comparable
generating plants. Requires capital additions to be benchmarked using the
limitation in Section 39.259(b).
(i) Authorizes an electric utility to:
(1) at any time after the start of the freeze period, securitize 100
percent of its regulatory assets as defined by Section 39.302 and up to 75
percent of its remaining estimated stranded costs as defined by this
section and recover such charges through a transition charge, pursuant to a
financing order issued by PUC under Section 39.303;
(2) implement, under bond, a nonbypassable charge of up to 100 percent of
its estimated stranded costs; or
(3) use a combination of the two methods under Subdivisions (1) and (2).
(j) Specifies the basis for the allocation of a competition transition
charge among retail customer classes.
(k) Specifies the factors that PUC is required to consider in determining
the length of time over which costs under Subsection (h) may be recovered.
(l) Requires the review of the stranded cost estimate and an adjustment to
reflect a final, actual valuation in the true-up proceeding two years after
customer choice is introduced. Authorizes PUC, if it determines the
competition transition charge is not sufficient based on that proceeding,
to extend the collection period for the charge or, if necessary, increase
the charge. Authorizes PUC, alternatively, if it is found in the true-up
proceeding that the competition transition charge is larger than is needed
to recover any remaining stranded costs, to reduce the competition
transition charge, to the extent it has not been securitized; reverse, in
whole or in part, the depreciation expense which has been redirected
pursuant to Section 39.256; reduce the transmission and distribution
utility's rates; or implement a combination of these elements.
Sec. 39.202. PRICE TO BEAT. (a) Requires an affiliated retail electric
provider, from January 1, 2002, until January 1, 2007, to charge specified
residential and small commercial customers of its affiliated transmission
and distribution utility specified adjusted rates that, on a bundled basis
are six percent less than the affiliated electric utility's corresponding
average residential and small commercial rates on a bundled basis, that
were in effect on January 1, 1999, adjusted to reflect the fuel factor
determined as provided by Subsection (b) and adjusted for any base rate
reduction as stipulated to by an electric utility in a proceeding for which
a final order had not been issued by January 1, 1999. Requires that these
rates on a bundled basis be known as the "price to beat" for residential
and small commercial customers, except that the "price to beat" for a
utility is the rate in effect as a result of a settlement approved by PUC
after January 1, 1999, if the PUC determines that base rates for that
utility have been reduced by more than 12 percent as a result of a final
order issued by the PUC after October, 1998.
(b) Requires PUC to determine the fuel factor for each electric utility in
the area as of December 31, 2001.
(c) Requires each affiliated power generation company, after the date of
customer choice, to file a final fuel reconciliation for the period ending
the day prior to the day customer choice is introduced. Requires the final
fuel balance from that reconciliation to be included in the true-up
proceeding pursuant to Section 39.262.
(d) Requires an affiliated retail electric provider to make public its
price to beat in a manner that provides adequate disclosure as determined
by PUC.
(e) Prohibits an affiliated retail electric provider from charging rates
for residential or small commercial customers that are different from the
price to beat until the earlier of 36 months after the date customer choice
is introduced or as otherwise specified.
(f) Authorizes the affiliated retail electric provider, notwithstanding
Subsection (e), to charge rates that are different from the price to beat
for service to aggregated loads of nonresidential customers having an
aggregated peak demand greater than 1,000 kilowatts, provided that all
affected customers are commonly owned or franchisees of the same
franchisor.
(g) Prohibits the affiliated retail electric provider from encouraging or
providing an incentive to a customer to switch to a nonaffiliated retail
electric provider, promote any nonaffiliated retail electric provider, or
exchange customers with any nonaffiliated retail electric provider to
comply with the requirements of Subsection (e)(1) or (2).
(h) Specifies the standards to be used for measuring electric power
consumption during the period prior to the onset of customer choice.
(i) Provides that for purposes of Subsection (h), if less than 12 months
of consumption history exists for any such customer, the usage history is
required to be supplemented with the prior history of that customer's
location. Requires the annual consumption, for service to a new location,
to be determined as the transmission and distribution utility's estimate of
the maximum annual kilowatt demand used in sizing the electric service to
that customer multiplied by 8,760 hours, and that product multiplied by the
average annual customer load factor for small commercial customers with
loads greater than 20 kilowatts for the year 2000.
(j) Requires an electric utility or a transmission and distribution
utility, upon determining that its affiliated retail electric provider has
met the requirements of Subsection (e), to make a filing with PUC attesting
to the fact that those requirements have been met and that the restrictions
of Subsection (e)(1) or (2) and the true-up in Section 39.262(e) are no
longer applicable. Requires PUC to adopt appropriate procedures to enable
it to accept or reject the filing within 30 days.
(k) Authorizes PUC to adjust the price to beat consistent with the results
of that proceeding following the true-up proceedings conducted pursuant to
Section 39.262.
(l) Authorizes an affiliated retail electric provider to request that PUC
adjust the fuel factor established under Subsection (b) up to twice a year
if the affiliated retail electric provider demonstrates that the existing
fuel factor does not adequately reflect significant changes in the market
price of natural gas and purchased energy used to serve retail customers.
(m) Provides that in a power region outside of ERCOT, if customer choice
is introduced before the requirements of Section 39.152(a) are met, an
affiliated retail electric provider is required to charge rates to
customers other than residential and small commercial customers that are no
higher than the rates that, on a bundled basis, were in effect on January
1, 1999, adjusted to reflect the fuel factor as provided by Subsection (b)
and adjusted for any base rate reduction as stipulated to by an electric
utility in a proceeding for which a final order had not been issued by
January 1, 1999.
(n) Provides that notwithstanding Subsection (a), in a power region
outside of ERCOT, if customer choice is introduced before the requirements
of Section 39.152(a) are met, an affiliated retail electric provider is
required to continue to offer the price to beat to residential and small
commercial customers, unless the price is changed by PUC in accordance with
this chapter, until the later of 60 months after the date customer choice
is introduced or the requirements of Section 39.152(a) are met.
(o) Provides that in this section, "small commercial customer" means a
commercial customer having a peak demand of 1,000 kilowatts or less.
(p) Requires PUC, upon finding that a retail electric provider will be
unable to maintain its financial integrity if it complies with Subsection
(a), to set the retail electric provider's price to beat at the minimum
level that will allow the retail electric provider to maintain its
financial integrity. Prohibits the price to beat from exceeding the level
of rates, on a bundled basis, charged by the affiliated electric utility on
September 1, 1999, adjusted for fuel.
Sec. 39.203. TRANSMISSION AND DISTRIBUTION SERVICE. (a) Requires
transmission and distribution utilities to provide transmission service at
wholesale under Subchapter A, Chapter 35. Requires a transmission and
distribution utility on and after January 1, 2002, to provide transmission
or distribution service, or both, at retail to an electric utility, a
retail electric provider, a municipally owned utility, an electric
cooperative, or an end-use customer at rates, terms of access, and
conditions that are comparable to those that apply to the transmission and
distribution utility and its affiliates. Requires a municipally owned
utility offering customer choice or an electric cooperative offering
customer choice to provide transmission or distribution service, or both,
at retail to all such entities pursuant to PUC's rules applicable to terms
and conditions of access and at rates adopted in accordance with Sections
40.055(a)(1) and 41.055(1), respectively.
(b) Requires an electric utility or electric cooperative that has not
opted for customer choice, or a municipally owned utility that has not
opted for customer choice, to provide wholesale transmission service at
distribution voltage when necessary to serve a wholesale customer.
Prohibits a customer of a municipally owned utility that has not opted for
customer choice or an electric cooperative that has not opted for customer
choice from claiming the status of a wholesale customer or being designated
as a wholesale customer if the customer is being or has been served under a
retail rate schedule of the municipally owned utility or electric
cooperative.
(c) Requires PUC, on or before January 1, 2002, to establish for all
retail electric utilities offering customer choice reasonable and
comparable terms and conditions under Section 39.201, that comply with
Subsection (a) for open access on distribution facilities and to establish,
for all retail electric utilities offering customer choice other than
municipally owned utilities and electric cooperatives, reasonable and
comparable rates for open access on distribution facilities.
(d) Requires the terms of access, conditions, and rates established under
Subsection (c) to be comparable to the terms of access, conditions, and
rates that the electric utility applies to itself or its affiliates.
Requires the rules to provide that all ancillary services provided by the
utility to itself or its affiliates are also available to third parties on
request on a nondiscriminatory basis.
(e) Authorizes PUC to require an electric utility or a transmission and
distribution utility to construct or enlarge facilities to ensure safe and
reliable service for the state's electric markets. Provides that in any
proceeding brought pursuant to Chapter 37, an electric utility or
transmission and distribution utility ordered to construct or enlarge
facilities pursuant to this subchapter does not need to prove that the
construction ordered is necessary for the service, accommodation,
convenience, or safety of the public or address the factors listed in
Section 37.056(c)(1)-(3) and (4)(E).
(f) Provides that PUC's rules must be consistent with the standards of
this title and may not be contrary to an applicable decision, rule, or
policy statement of a federal regulatory agency having jurisdiction.
(g) Requires each power region to have generally applicable tariffs
approved by PUC or a federal regulatory agency having jurisdiction that
guarantees open and nondiscriminatory access as required by Section 39.152.
Prohibits this subsection from being deemed to vest in PUC power to set or
approve distribution access rates of a municipally owned utility or an
electric cooperative that has adopted customer choice.
Sec. 39.204. TARIFFS FOR OPEN ACCESS. Requires each transmission and
distribution utility to file a tariff implementing the open access rules
with PUC or the federal regulatory authority having jurisdiction over the
transmission and distribution service of the utility, no later than the
90th day before the date customer choice is offered by that utility.
Sec. 39.205. REGULATION OF COSTS FOLLOWING THE FREEZE PERIOD. Provides
that at the conclusion of the freeze period, any remaining costs associated
with nuclear decommissioning obligations continue to be subject to cost of
service rate regulation and are required to be included as a nonbypassable
charge to retail customers.
SUBCHAPTER F. RECOVERY OF STRANDED COSTS THROUGH COMPETITION TRANSITION
CHARGE
Sec. 39.251. DEFINITIONS. Defines "above market purchased power costs,"
"existing purchased power contract," "generation assets," "market value,"
"purchased power market value," "retail stranded costs," and "stranded
cost."
Sec. 39.252. RIGHT TO RECOVER STRANDED COSTS. (a) Provides that an
electric utility is allowed to recover all of its net, verifiable,
nonmitigable stranded costs incurred in purchasing power and providing
electric generation service.
(b) Requires recovery of retail stranded costs by an electric utility to
be from all existing or future retail customers, including the facilities,
premises, and loads of such retail customers, within the utility's
geographical certificated service area as it existed on May 1, 1999.
(c) Provides that in multiply certificated areas, a retail customer may
not avoid stranded cost recovery charges by switching to another electric
utility, electric cooperative, or municipally owned utility after May 1,
1999. A customer in a multiply certificated service area that requested to
switch providers on or before May 1, 1999, or was not taking service from
an electric utility on May 1, 1999, and does not do so after that date is
not responsible for paying retail stranded costs of that utility.
(d) Requires an electric utility to pursue commercially reasonable means
to reduce its potential stranded costs. Requires PUC to consider the
utility's efforts under this subsection when determining the amount of the
utility's stranded costs, provided, however, that nothing in this section
authorizes PUC to substitute its judgment for a market valuation of
generation assets determined under Sections 39.262(h) and (i).
Sec. 39.253. ALLOCATION OF STRANDED COSTS. (a) Requires PUC, in allocating
retail stranded costs among retail customer classes, to determine a cost
allocation methodology that incorporates the enumerated factors.
(b) Requires retail stranded costs not directly related to a generation
plant to be allocated to retail customer classes based on the kilowatt hour
usage of each class.
(c) Provides that, except as provided by proposed Section 39.262(k), no
customer or customer class may avoid the obligation to pay the amount of
stranded costs allocated to that customer or class.
Sec. 39.254. USE OF REVENUES FOR UTILITIES WITH STRANDED COSTS. Provides
that this subchapter provides a number of tools to an electric utility to
mitigate stranded costs. Provides that each electric utility that was
reported by PUC to have positive "excess costs over market" (ECOM), denoted
as the "base case" for the amount of stranded costs before full retail
competition in 2001 with respect to its Texas jurisdiction, in the April
1998 Report to the Texas Senate Interim Committee on Electric Utility
Restructuring entitled "Potentially Strandable Investment (ECOM) Report:
1998 Update," must use these tools to reduce the net book value of,
otherwise referred to as "accelerate" the cost recovery of, its stranded
costs each year. Requires that any positive difference under the report
required by Section 39.257(b) be applied to the net book value of
generation assets.
Sec. 39.255. USE OF REVENUES FOR UTILITIES WITH NO STRANDED COSTS. (a)
Requires an electric utility that does not have stranded costs described by
Section 39.254 to be permitted to use any positive difference under the
report required by Section 39.257(b) on capital expenditures to improve or
expand transmission or distribution facilities, or on capital expenditures
to improve air quality, as approved by PUC. Requires that any such capital
expenditures be made in the calendar year immediately following the year
for which the report required by Section 39.257 is calculated. Requires
that such capital expenditures be reflected in any future proceeding under
this chapter to set transmission or distribution rates as a reduction to
the utility's transmission and distribution invested capital, as approved
by PUC.
(b) Requires amounts, to the extent that positive differences under the
report required by Section 39.257(b) are not used for such capital
expenditures, to be flowed back to the electric utility's Texas
jurisdictional customers through the power cost recovery factor.
(c) Provides that this section applies only to the use of positive
differences under the report required by Section 39.257(b) for each year
during the freeze period.
Sec. 39.256. OPTION TO REDIRECT DEPRECIATION. (a) Authorizes an electric
utility described in Section 39.254, for the calendar years of 1998, 1999,
2000, and 2001, to redirect all or a part of the depreciation expense
relating to transmission and distribution assets to its net generation
plant assets.
(b) Requires the electric utility to report a decision under Subsection
(a) to PUC and any other applicable regulatory authority.
(c) Requires an adjustment made to the book value of transmission and
distribution assets or the creation of any related regulatory assets
resulting from the redirection under this section to be accepted and
applied by PUC for establishing net invested capital and transmission and
distribution rates for retail customers in all future proceedings.
(d) Prohibits the design of post-freeze-period retail rates from shifting
the allocation of responsibility for stranded costs, including the adjusted
costs in wholesale transmission and distribution rates, or applying the
adjustments for the purpose of establishing net invested capital and
transmission and distribution rates for wholesale customers,
notwithstanding the provisions of Subsection (c).
Sec. 39.257. ANNUAL REPORT. (a) Requires each electric utility, beginning
with the 1999 calendar year, to file a report with PUC no later than 90
days after the end of each year during the freeze period under a schedule
and a format determined by PUC.
(b) Requires the report to identify any positive difference between annual
revenues, reduced by the amount of annual revenues under Sections 36.203
and 36.205, the revenues received under the interutility billing process as
adopted by PUC to implement Sections 35.004, 35.006, and 35.007, revenues
associated with transition charges as defined by Section 39.302, and annual
costs.
Sec. 39.258. ANNUAL REPORT: DETERMINATION OF ANNUAL COSTS. Specifies the
amounts to be used for the purposes of determining the annual costs in each
annual report.
Sec. 39.259. ANNUAL REPORT: DETERMINATION OF INVESTED CAPITAL. (a)
Requires, for the purposes of determining invested capital in each annual
report, the net plant in service, regulatory assets, and deferred federal
income taxes to be updated each year, and requires generation-related
invested capital to be reduced by the amount of securitization under
Sections 39.201(i) and 39.262(e) to the extent otherwise included in
invested capital.
(b) Provides that capital additions to a plant in an amount less than
1-1/2 percent of the electric utility's net plant in service on December
31, 1998, less plant items previously excluded by PUC, for each of the
years 1999 through 2001 are presumed prudent.
(c) Requires all other items in invested capital to be as approved in the
electric utility's last rate proceeding before PUC.
Sec. 39.260. USE OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. (a) Requires
the definition and identification of invested capital and other terms used
in this subchapter and Subchapter G that affect the net book value of
generation assets and the treatment of transactions performed under Section
35.035 and other transactions authorized under this title or approved by
the regulatory authority that affect the net book value of generation
assets during the freeze period to be treated in accordance with generally
accepted accounting principles as modified by regulatory accounting rules
generally applicable to utilities.
(b) Requires the principles and criteria described by Subsection (a),
including the criteria for applicability of Statement of Financial
Accounting Standards No. 71 ("Accounting for the Effects of Certain Types
of Regulation"), to be applied as they existed on January 1, 1999.
Sec. 39.261. REVIEW OF ANNUAL REPORT. (a) Provides that the annual
report filed under this subchapter is a public document and is required to
be reviewed by the staff of PUC and the office of public utility counsel.
Authorizes both staffs to review work papers and supporting documents and
engage in discussions with the utility about the data underlying the
reports.
(b) Requires the staff of PUC and the office of public utility counsel to
communicate in writing to an electric utility if they have any
disagreements with the data or computations, no later than the 180th day
after the date the report is filed.
(c) Requires PUC to finalize and resolve any disagreements related to the
annual report, consistent with the requirements of Section 39.258, as
follows:
(1) for each calendar year, PUC is required to finalize the annual report
prior to establishing the competition transition charge pursuant to Section
39.201; and
(2) for each calendar year, PUC is required to finalize the annual report
and reflect the result as part of the true-up proceeding under Section
39.262.
Sec. 39.262. TRUE-UP PROCEEDING. (a) Prohibits an electric utility,
together with its affiliated retail electric provider and its affiliated
transmission and distribution utility, from being permitted to overrecover
stranded costs through the procedures established by this section or
through the application of the measures provided by the other sections of
this chapter.
(b) Requires an electric utility located in a power region not certified
under Section 39.152, after the freeze period, to continue to file annual
reports as if the freeze period remained in effect, until the power region
qualifies as certified under Section 39.152. Requires PUC staff and the
office of public utility counsel to continue to review the annual reports
as provided by Section 39.261.
(c) Requires each transmission and distribution utility, its affiliated
retail electric provider, and its affiliated power generation company,
after January 10, 2004, and at a schedule and under procedures determined
by PUC, to jointly file to finalize stranded costs under Subsections (h)
and (i) and reconcile those costs with the estimated stranded costs used to
develop the competition transition charge in the proceeding held under
Section 39.201. Requires any resulting difference to be applied to the
nonbypassable delivery rates of the transmission and distribution utility,
except that at the utility's option, any or all of the remaining stranded
costs may be securitized pursuant to Subchapter G.
(d) Requires the affiliated power generation company to reconcile, and
either credit or bill to the transmission and distribution utility, the net
sum of the former electric utility's final fuel balance determined pursuant
to Section 39.202(c) and any difference between the price of power obtained
through the capacity auctions under Sections 39.153 and 39.156 and the
power cost projections which were employed for the same time period in the
ECOM model to estimate stranded costs in the proceeding under Section
39.201.
(e) Requires an affiliated retail electric provider, to the extent that
the price to beat exceeded the market price of electricity, to reconcile
and credit to the affiliated transmission and distribution utility any
positive difference between the price to beat established under Section
39.202, reduced by the nonbypassable delivery charge established under
Section 39.201, and the prevailing market price of electricity during the
same time period. Provides that a reconciliation is not required under
this subsection of any affiliated retail electric provider that satisfies
the requirements of Section 39.202(e)(1) or (2) prior to the expiration of
two years from the introduction of customer choice. Prohibits the amount
credited, if a reconciliation is required, from exceeding an amount equal
to the number of residential or small commercial customers served by the
affiliated transmission and distribution utility that are buying
electricity from the affiliated retail electric provider at the price to
beat on the second anniversary of the beginning of competition, minus the
number of new customers obtained outside the service area, multiplied by
$150.
(f) Requires PUC, to the extent that any amount of regulatory assets
included in a securitization charge or competitive transition charge
exceeds the amount of regulatory assets approved in a rate order which
became effective on or before September 1, 1999, to conduct a review during
the true-up proceeding to determine whether such amounts were appropriately
calculated and constituted reasonable and necessary costs pursuant to
Subchapter B (Computation of Rates), Chapter 36. Requires a credit or
other rate adjustment, if the PUC finds that the amount of regulatory
assets specified in Section 39.302(5) is subject to modification, to be
made to the transmission and distribution utility's nonbypassable delivery
rates; provided, however, that no adjustment is authorized to be made to a
transition charge established under Subchapter G.
(g) Requires the transmission and distribution utility to make necessary
adjustments to the nonbypassable delivery rates it charges to retail
electric providers based on the credits or bills received from its
affiliates pursuant to Subsections (d), (e), and (f). Authorizes PUC, if it
determines that the nonbypassable delivery rates are not sufficient, to
extend the original collection period for the charge or, if necessary,
increase the charge. Requires PUC, if it determines that the nonbypassable
delivery rates are larger than are needed to recover the transmission and
distribution utility's costs, to correspondingly reduce the competition
transition charge, to the extent it has not been securitized; the
depreciation expense which has been redirected pursuant to Section 39.256;
the transmission and distribution utility's rates; or a combination of
these elements.
(h) Specifies that, except as provided in Subsection (i), the methods by
which the affiliated power generation company is required to quantify its
stranded costs for the purpose of finalizing the stranded cost estimate
used to establish the competition transition charge under Section 39.201
are the sale of assets, the stock valuation method, the partial stock
valuation method, and the exchange of assets. Specifies the requirements
of each method.
(i) Requires the electric utility to quantify its stranded costs for
nuclear assets using the ECOM method, unless an electric utility or its
affiliated power generation company combines all of its remaining
generation assets into one or more transferee corporations as described by
Subsections (g)(2) and (3). Provides that the ECOM method is the
estimation model prepared for and described by PUC's April 1998 Report to
the Texas Senate Interim Committee on Electric Restructuring entitled
"Potentially Strandable Investment (ECOM) Report: 1998 Update." Provides
that the methodology used in the model must be the same as that used in the
1998 report to determine the "base case." Requires the ECOM model, at the
time of the proceeding under this section, to be rerun using updated
company-specific inputs required by the model, updating the market price of
electricity, and using updated natural gas price forecasts and the capacity
cost based on the long-run marginal cost of the most economic new
generation technology then available. Provides that natural gas price
projections used in the model must be market-based natural gas forward
prices, where available. Requires growth rates in generating plant
operations and maintenance costs and allocated administrative and general
costs to be benchmarked by comparing those costs to the best available
information on cost trends for comparable generating plants. Requires
capital additions to be benchmarked using the limitation in Section
39.259(b).
(j) Requires PUC to issue a final order no later than the 150th day after
the date of the filing under this section by the transmission and
distribution utility, its affiliated retail electric provider, and its
affiliated power generation company, and requires the resulting order to be
subject to judicial review under Chapter 2001, Government Code.
(k) To the extent that a customer's actual load has been lawfully served by
a fully operational qualifying facility before September 1, 2001, or by an
on-site power production facility with a rated capacity of 10 megawatts or
less, requires any charge for recovery of stranded costs under this section
or Subchapter G assessed on a customer after the facility becomes fully
operational, to be included only in those tariffs or charges associated
with the services actually provided by the transmission and distribution
utility to the customer after the facility became fully operational,
notwithstanding Section 39.252. Prohibits such a charge from including any
costs associated with the service provided to the customer by the electric
utility or its affiliated transmission and distribution utility under their
tariffs before the operation of that qualifying facility, notwithstanding
Section 39.252. Provides that to qualify under this subsection, a
qualifying facility must have made substantially complete filings on or
before December 31, 1999, for all necessary site-specific environmental
permits under the rules of the Texas Natural Resource Conservation
Commission (TNRCC) in effect at the time of filing.
Sec. 39.263. STRANDED COST RECOVERY OF ENVIRONMENTAL CLEANUP COSTS. (a)
Provides that, subject to the provisions of Subsection (c), capital costs
incurred by an electric utility to improve air quality prior to January 1,
2002, are eligible for inclusion as net invested capital under Section
39.259, notwithstanding the limitations imposed under specified sections.
(b) Provides that subject to the provisions of Subsection (c), capital
costs incurred by an electric utility or an affiliated power generation
company to improve air quality subsequent to January 1, 2002, and prior to
May 1, 2003, are eligible for inclusion in the determination of invested
capital in the true-up proceeding under Section 39.262.
(c) Requires reasonable costs incurred under Subsections (a) and (b) to be
included as invested capital and considered in an electric utility's
stranded cost determination only to the extent that:
(1) the cost is applied to offset or reduce the emission of airborne
contaminants from an electric generating facility, where the reduction or
offset is determined by TNRCC to be an essential component in achieving
compliance with a national ambient air quality standard or the reduction or
offset is necessary in order for an unpermitted electric generating
facility to obtain a permit in the manner provided by Section 39.264;
(2) the retrofit decision is determined to be the most cost-effective
after consideration of alternative measures, including the retirement of
the generating facility; and
(3) the amount and location of resulting emission reductions is consistent
with the air quality goals and policies of TNRCC.
(d) Requires, if the retirement of a generating facility is the most
cost-effective alternative, taking into account the cost of replacement
generating capacity, the net book value, including retirement costs and
offsetting salvage value, of the affected facility to be included in the
electric utility's stranded cost determination, notwithstanding the
provisions of Section 39.259(c).
Sec. 39.264. EMISSIONS REDUCTIONS OF "GRANDFATHERED FACILITIES." (a)
Defines "conservation commission" and "electric generating facility."
(b) Provides that this section applies only to an electric generating
facility existing on January 1, 1999, that is not subject to the
requirement to obtain a permit under Section 382.0518(g) (Preconstruction
Permit), Health and Safety Code.
(c) Limits the total annual emissions of nitrogen oxides from facilities
subject to this section to 50 percent of 1997 emissions, and of sulphur
dioxides from coal-fired facilities subject to this section to 75 percent
of 1997 emissions, for every 12-month period starting May 1, 2003, from
exceeding certain levels. Authorizes the limitations to be met through an
emissions allocation and allowance transfer system described by this
section.
(d) Authorizes a municipal corporation, electric cooperative, or river
authority to exclude any electric generating facilities of 25 megawatts or
less from the requirements prescribed by this section. Provides that no
later than January 1, 2000, a municipal corporation, electric cooperative,
or river authority must inform TNRCC of its intent to exclude those
facilities.
(e) Requires the owner or operator of an electric generating facility to
apply to TNRCC for a permit for the emission of air contaminants on or
before September 1, 2000. Requires a permit to require the facility to
achieve emissions reductions or trading emissions allowances as provided by
this section. Provides that if the facility uses coal as a fuel, the
permit must also be conditioned on the facility's emissions meeting opacity
limitations in TNRCC rules. Prohibits a facility that does not obtain a
permit as required by this subsection, notwithstanding Section 382.0518(g),
Health and Safety Code, from operating after May 1, 2003, unless TNRCC
finds good cause for an extension.
(f) Requires TNRCC to develop rules for the permitting of electric
generating facilities. Requires the rules to provide, by region, for the
allocation of emissions allowances among electric generating facilities and
for facilities to trade emissions allowances for those contaminants.
(g) Requires TNRCC, by rule, to establish an East Texas Region, a West
Texas Region, and an El Paso Region for allocation of air contaminants
under the permitting program under Subsection (f). Sets forth the
components of each region.
(h) Requires TNRCC, before January 1, 2000, to allocate to each electric
generating facility in each region a number of annual emissions allowances.
Provides that TNRCC must allocate to each facility a number of emissions
allowances equal to a certain measured emissions rate. Sets forth emission
rates for each geographic region. Provides that allowances for sulphur
dioxides may only be allocated among coal fired facilities.
(i) Authorizes a person, municipal corporation, electric cooperative, or
river authority that owns and operates an electric generating facility not
covered by this section to elect to designate that facility to become
subject to the requirements of this section and to receive emissions
allowances for the purpose of complying with the emissions limitations
prescribed by Subsection (c). Requires TNRCC to adopt rules governing this
election.
(j) Requires TNRCC, by rule, to permit a facility to trade emissions
allocations with other electric generating facilities only in the same
region.
(k) Requires TNRCC, by rule, to provide methods for determining whether a
facility complies with the permit issued. Sets forth provisions of the
rules.
(l) Prohibits a facility from trading an unused allowance for a
contaminant for use as a credit for another contaminant.
(m) Prohibits a person possessing market power from withholding emissions
allowances from the market in a manner that is unreasonably discriminatory
or tends to unreasonably restrict, impair, or reduce the level of
competition.
(n) Requires TNRCC to penalize a facility that emits an air contaminant
that exceeds its allowance for that contaminant through the enumerated
methods.
(o) Authorizes the conservation commission to penalize a facility that
emits an air contaminant that exceeds the facility's allowances for that
contaminant by ordering the facility to cease operations or taking other
enforcement action provided by TNRCC rules.
(p) Requires TNRCC, by rule, to provide for a facility in the El Paso
Region to meet emissions allowances by using credits from emissions
reductions achieved in Ciudad Juarez, United Mexican States.
(q) Provides that if TNRCC or the United States Environmental Protection
Agency determines that reductions in nitrogen oxide emissions in the El
Paso Region otherwise required by this section would result in increased
ambient ozone levels in El Paso County, facilities in the El Paso Region
are exempt from the nitrogen oxides reduction requirements.
(r) Requires an applicant for a permit to publish notice of intent to
obtain the permit. Requires TNRCC to provide an opportunity for a public
hearing and the submission of public comment and send notice of a decision
on an application for a permit in the same manner as provided in Sections
382.0561 (Federal Operating Permit: Hearing) and 382.0562 (Notice of
Decision), Health and Safety Code. Requires TNRCC to review and renew a
permit issued under this section in accordance with Section 382.055 (Review
and Renewal of Preconstruction Permit), Health and Safety Code.
(s) Provides that this section does not limit the authority of TNRCC to
require further reductions of nitrogen oxides, sulphur dioxides, or any
other pollutant from generating facilities subject to this section or
Section 39.263.
Sec. 39.265. RIGHTS NOT AFFECTED. Provides that this chapter is not
intended to alter any rights of utilities to recover stranded costs from
wholesale customers.
SUBCHAPTER G. SECURITIZATION
Sec. 39.301. PURPOSE. Provides that the purpose of this subchapter is to
enable utilities to use securitization financing to recover regulatory
assets and stranded costs due to the fact that this type of debt will lower
the carrying costs of the assets relative to the costs that would be
incurred using conventional utility financing methods. Requires the
savings associated with securitization to work to the benefit of
ratepayers. Prohibits the amount securitized from exceeding the present
value of the revenue requirement over the life of the proposed transition
bond associated with the regulatory assets or stranded costs sought to be
securitized. Requires the present value calculation to use a discount rate
equal to the proposed interest rate on the transition bonds.
Sec. 39.302. DEFINITIONS. Defines "assignee," "financing order,"
"financing party," "qualified costs," "regulatory assets," "transition
bonds," "transition charges," and "transition property."
Sec. 39.303. FINANCING ORDERS; TERMS. (a) Requires PUC to adopt a
financing order, on application of a utility to recover the utility's
regulatory assets and eligible stranded costs, upon making a finding that
the total amount of revenues to be collected pursuant to the financing
order is less than the revenue requirement that would be recovered over the
remaining life of the stranded costs using conventional financing methods
and that the financing order is consistent with the standards in Section
39.301.
(b) Requires the financing order to detail the amount of regulatory assets
and stranded costs to be recovered and the period over which the
nonbypassable transition charges shall be recovered, not to exceed 15
years.
(c) Requires transition charges to be collected and allocated among
customers in the same manner as competition transition charges pursuant to
Section 39.201.
(d) Requires a financing order to become effective in accordance with its
terms, and requires that the financing order, together with the transition
charges authorized in the order, to thereafter be irrevocable and not
subject to reduction, impairment, or adjustment by further action of PUC,
except as permitted by Section 39.307.
(e) Requires PUC to issue a financing order pursuant to Subsections (a)
and (g) no later than 90 days after the utility files its request for the
financing order.
(f) Prohibits a financing order from being subject to rehearing by PUC.
Authorizes a financing order to be reviewed by appeal to a Travis County
district court by a party to the proceeding if the appeal is filed within
15 days after the financing order is signed by PUC. Authorizes the
district court judgment to be reviewed only by direct appeal to the Supreme
Court of Texas if the appeal is filed within 15 days after entry of
judgment. Requires appeals to be heard and determined by the district court
and the Supreme Court of Texas as expeditiously as possible with lawful
precedence over other matters. Requires review on appeal to be based solely
on the record before PUC and briefs to the court, and requires the appeal
to be limited to whether the financing order conforms to the constitution
and laws of this state and the United States and is within the authority of
PUC pursuant to this chapter.
(g) Authorizes PUC, at the request of an electric utility, to adopt a
financing order providing for retiring and refunding transition bonds if it
finds that the future transition charges required to service the new
transition bonds, including transaction costs, will be less than the future
transition charges required to service the transition bonds being refunded.
Requires PUC, upon the retirement of the refunded transition bonds, to
adjust the related transition charges accordingly.
Sec. 39.304. PROPERTY RIGHTS. (a) Provides that the rights and interests
of an electric utility or successor under a financing order, including the
right to impose, collect, and receive transition charges authorized in the
order, are only contract rights until they are transferred to an assignee
or pledged in connection with the issuance of transition bonds, at which
time they will become "transition property."
(b) Provides that transition property constitutes a present property right
for purposes of contracts concerning the sale or pledge of property, even
though the imposition and collection of transition charges depends on
further acts of the utility or others that have not yet occurred. Provides
that the financing order remains in effect and the property continues to
exist for the same period as the pledge of the state described in Section
39.310.
(c) Provides that all revenues and collections resulting from transition
charges constitute proceeds only of the transition property arising from
the financing order.
Sec. 39.305. NO SETOFF. Prohibits the interest of an assignee or pledgee
in transition property and in the revenues and collections arising from
that property from being subject to setoff, counterclaim, surcharge, or
defense by the electric utility or another person or in connection with the
bankruptcy of the electric utility or any other entity. Requires a
financing order to remain in effect and unabated notwithstanding the
bankruptcy of the electric utility, its successors, or assignees.
Sec. 39.306. NO BYPASS. Requires a financing order to include terms
ensuring that the imposition and collection of transition charges
authorized in the order shall be nonbypassable.
Sec. 39.307. TRUE-UP. Requires a financing order to include a mechanism
requiring that transition charges be reviewed and adjusted at least
annually, within 45 days of the anniversary date of the issuance of the
transition bonds, to correct any overcollections or undercollections of the
preceding 12 months and to ensure the expected recovery of amounts
sufficient to timely provide all payments of debt service and other
required amounts and charges in connection with the transition bonds.
Sec. 39.308. TRUE SALE. Provides that an agreement by an electric utility
or assignee to transfer transition property that expressly states that the
transfer is a sale or other absolute transfer signifies that the
transaction is a true sale and is not a secured transaction and that title,
legal and equitable, has passed to the entity to which the transition
property is transferred. Provides that this true sale applies regardless
of whether the purchaser has any recourse against the seller, or any term
of the parties' agreement.
Sec. 39.309. SECURITY INTERESTS; ASSIGNMENT; COMMINGLING; DEFAULT. (a)
Prohibits transition property from constituting an account or general
intangible under Section 9.106, Business & Commerce Code (Definitions:
"Account"; "General Intangibles"). Provides that the creation, granting,
perfection, and enforcement of liens and security interests in transition
property are governed by this section and not by the Business & Commerce
Code.
(b) Provides that a valid and enforceable lien and security interest in
transition property may be created only by a financing order and the
execution and delivery of a security agreement with a financing party in
connection with the issuance of transition bonds. Provides that the lien
and security interest attaches automatically from the time that value is
received for the bonds, and on perfection through the filing of notice with
the secretary of state in accordance with Subsection (d), shall be a
continuously perfected lien and security interest and all proceeds ,
whether accrued or not, shall have priority in the order of filing and take
precedence over any subsequent judicial or other lien creditor. Provides
that if notice is filed within 10 days after value is received for the
transition bonds, the security interest is perfected retroactive to the
date value was received, otherwise, the security interest is perfected as
of the date of filing.
(c) Provides that transfer of an interest in transition property to an
assignee is perfected against all third parties, including subsequent
judicial or lien creditors, when the financing order becomes effective,
transfer documents have been delivered to the assignee, and a notice of
that transfer has been filed in accordance with the rules prescribed under
Subsection (d). Provides that if notice of the transfer has not been filed
in accordance with this subsection within 10 days after the delivery of
transfer documentation, the transfer of the interest is not perfected
against third parties until the notice is filed.
(d) Requires the secretary of state to implement this section by
establishing and maintaining a separate system of records for the filing of
notices under this section and to prescribe the rules for such filings
based on Chapter 9, Business & Commerce Code (Secured Transactions; Sales
of Accounts and Chattel Paper).
(e) Provides that the priority of a lien and security interest perfected
under this section is not impaired by any later modification of the
financing order or by the commingling of funds arising from transition
charges with other funds. Requires any other security interest that may
apply to those funds to be terminated when they are transferred to a
segregated account for the assignee or a financing party. Requires that
the proceeds of transition property, which has been transferred to an
assignee, be held in trust for the assignee.
(f) Authorizes the financing parties or their representatives, if a
default or termination occurs under the transition bonds, to foreclose on
or enforce their lien and security interest in any transition property as
if they were secured parties under Chapter 9, Business & Commerce Code, and
authorizes PUC to order that amounts arising from transition charges be
transferred to a separate account for the financing parties' benefit, to
which their lien and security interest applies. Requires a Travis County
district court, on application by or on behalf of the financing parties, to
order the sequestration and payment to them of revenues arising from the
transition charges.
Sec. 39.310. PLEDGE OF STATE. Provides that transition bonds are not a
debt or obligation of the state and are not a charge upon its full faith
and credit or taxing power. Establishes that the state pledges, for the
benefit and protection of financing parties and the electric utility, that
it will not take or permit any action that would impair the value of
transition property, or, except as permitted by Section 39.907, reduce,
alter, or impair the transition charges to be imposed, collected, and
remitted to financing parties, until the principal, interest and premium,
and any other charges incurred and contracts to be performed in connection
with the related transition bonds have been paid and performed in full.
Authorizes a party issuing transition bonds to include this pledge in any
documentation relating to such bonds.
Sec. 39.311. TAX EXEMPTION. Provides that transactions involving the
transfer and ownership of transition property and the receipt of transition
charges are exempt from state and local income, sales, franchise, gross
receipts, and other taxes or similar charges.
Sec. 39.312. NOT PUBLIC UTILITY. Prohibits an assignee or financing party
from being considered a public utility or person providing electric service
solely by virtue of the transactions described in this subchapter.
Sec. 39.313. SEVERABILITY. Provides that, effective upon the date the
first utility transition bonds are issued under this subchapter, if any
provision in this title or portion of this title is held to be invalid or
is invalidated, superseded, replaced, repealed, or expires, for any reason,
that occurrence does not affect the validity or continuation of this
subchapter, specified sections, or any other provision of this title
relevant to the issuance, administration, payment, retirement, or refunding
of transition bonds or to any actions of the electric utility, its
successors, an assignee, a collection agent, or a financing party, which
remains in full force and effect.
SUBCHAPTER H. CERTIFICATION AND REGISTRATION; PENALTIES
Sec. 39.351. REGISTRATION OF POWER GENERATION COMPANIES. (a) Prohibits a
person from generating electricity without being registered with PUC as a
power generation company. Authorizes a person to register as a power
generation company by filing the specified information with PUC.
(b) Requires a power generation company to comply with the reliability
standards adopted by an independent organization certified by PUC to ensure
the reliability of the regional electrical network for a power region in
which the power generation company is generating or selling electricity.
(c) Authorizes a power generation company to register any time after
September 1, 2000.
Sec. 39.352. CERTIFICATION OF RETAIL ELECTRIC PROVIDERS. (a) Prohibits a
person, including an affiliate of an electric utility, after the date of
customer choice, from providing retail electric service in this state
unless the person is certified by PUC as a retail electric provider.
(b) Requires PUC to issue a certificate to provide retail electric service
to a person applying for certification who demonstrates specified
criteria.
(c) Requires a person applying for certification under this section to
comply with all applicable customer protection provisions, disclosure
requirements, and marketing guidelines established by PUC and by this title
(Public Utility Regulatory Act).
(d) Requires a retail electric provider to be certified for purposes of
serving certain customers so long as it demonstrates that it meets the
requirements of Subsection (b)(4), if the provider files with PUC a signed,
notarized affidavit from each retail customer with which it has contracted
to provide one megawatt or more of capacity which states that the customer
is satisfied that the retail electric provider meets the standards set
forth in Subsections (b) and Subsection (c), notwithstanding specified
subsections.
(e) Authorizes a retail electric provider to apply for certification
anytime after September 1, 2000.
(f) Requires PUC to use any information required in this section in a
manner that ensures the confidentiality of competitively sensitive
information.
(g) Provides that if a retail electric provider serves an aggregate load
in excess of 300 megawatts within this state, not less than five percent of
the load in megawatt hours must consist of residential customers. Provides
that this requirement applies to an affiliated retail electric provider
only with respect to load served outside of the electric utility's service
area, and, in relation to that load, the affiliated retail electric
provider is required to meet the requirements of this subsection by serving
residential customers outside of the electric utility's service area.
Requires the load served by retail electric providers that are under common
ownership to be combined. Authorizes a retail provider to meet the
requirements of this subsection by demonstrating on an annual basis that it
serves residential load amounting to five percent of its total load through
the specified methods. Prohibits qualifying residential load from including
customers served by an affiliated retail electric provider in its own
service area. Requires each retail electric provider to file reports with
PUC that are necessary to implement this subsection. Provides that this
subsection applies for 36 months after retail competition begins. Requires
PUC to adopt rules to implement this subsection.
Sec. 39.353. REGISTRATION OF AGGREGATORS. (a) Prohibits a person from
providing aggregation services in the state unless the person is registered
with PUC as an aggregator.
(b) Provides that "aggregator" means a person joining two or more
customers, other than municipalities and political subdivision
corporations, into a single purchasing unit to negotiate the purchase of
electricity from retail electric providers. Prohibits aggregators from
selling or taking title to electricity. Provides that retail electric
providers are not aggregators.
(c) Requires a person registering under this section to comply with all
customer protection provisions, all disclosure requirements, and all
marketing guidelines established by PUC and by this title.
(d) Requires PUC to establish terms and conditions it determines necessary
to regulate the reliability and integrity of aggregators in the state by
June 1, 2000.
(e) Authorizes an aggregator to register any time after September 1, 2000.
(f) Provides that PUC has up to 60 days to process applications for
registration filed by aggregators.
(g) Provides that registration is not required of a customer that is
aggregating loads from its own location or facilities.
Sec. 39.354. REGISTRATION OF MUNICIPAL AGGREGATORS. (a) Prohibits a
municipal aggregator from providing aggregation services in the state
unless the municipal aggregator registers with PUC.
(b) Provides that "municipal aggregator" means a person authorized by two
or more municipal governing bodies to join the bodies into a single
purchasing unit to negotiate the purchase of electricity from retail
electric providers.
(c) Authorizes a municipal aggregator to register any time after September
1, 2000.
Sec. 39.3545. REGISTRATION OF POLITICAL SUBDIVISION AGGREGATORS. Prohibits
a political subdivision aggregator from providing aggregation services in
the state unless the political subdivision aggregator registers with PUC.
Defines "political subdivision aggregator." Authorizes a political
subdivision to register any time after September 1, 2000.
Sec. 39.355. REGISTRATION OF POWER MARKETERS. Prohibits a person from
selling electric energy at wholesale as a power marketer unless the person
registers with PUC.
Sec. 39.356. REVOCATION OF CERTIFICATION. (a) Authorizes PUC to suspend,
revoke, or amend a retail electric provider's certificate for significant
violations of this title or the rules adopted pursuant to this title or of
any reliability standard adopted by an independent organization certified
by PUC to ensure the reliability of a power region's electrical network.
Authorizes PUC to suspend or revoke a retail electric provider's
certificate if the provider no longer has the financial or technical
capability to provide continuous and reliable electric service.
(b) Authorizes PUC to suspend or revoke a power generation company's
registration for significant violations of this title or the rules adopted
pursuant to this title or of the reliability standards adopted by an
independent organization certified by PUC to ensure the reliability of a
power region's electrical network.
(c) Authorizes PUC to suspend or revoke an aggregator's registration for
significant violations of this title or of the rules adopted pursuant to
this title.
Sec. 39.357. ADMINISTRATIVE PENALTY. Authorizes PUC to impose an
administrative penalty for violations described by Section 39.356, in
addition to the suspension, revocation, or amendment of a certification.
Sec. 39.358. LOCAL REGISTRATION OF RETAIL ELECTRIC PROVIDER. Authorizes a
municipality to require a retail electric provider to register with the
municipality as a condition of serving residents of the municipality.
Authorizes the municipality to assess a reasonable administrative fee for
this purpose. Authorizes the municipality to suspend or revoke a retail
electric provider's registration and operation in that municipality for
significant violations of this chapter or the rules adopted under this
chapter.
SUBCHAPTER I. PROVISIONS FOR CERTAIN NON-ERCOT UTILITIES
Sec. 39.401. APPLICABILITY. Requires this chapter to apply to
investor-owned electric utilities operating solely outside of ERCOT having
fewer than six synchronous interconnections with voltage levels above 69
kilovolts systemwide on the effective date of this subchapter. Provides
that this subchapter recognizes that circumstances exist that require areas
served by such utilities to be treated as competitive development areas in
which full retail customer choice may develop on a more structured schedule
than is anticipated for the rest of the state. Provides that if there are
any conflicts between this subchapter and any other provisions of this
chapter, the provisions of this subchapter shall control, but shall not be
deemed to limit or in any way restrict any provision of this title that
governs customer protection or quality or reliability of service.
Sec. 39.402. TRANSITION TO COMPETITION PLAN. Requires all electric
utilities subject to this chapter to file a transition to competition plan
with PUC by December 1, 2000. Requires this plan to identify how utilities
subject to this subchapter shall achieve full customer choice. Requires
PUC to approve, modify, or reject a plan within 180 days after the date of
a filing under this section. Authorizes the transition to competition plan
to be updated or amended as circumstances change, subject to PUC approval.
Sec. 39.403. UNBUNDLING. Requires electric utilities subject to this
subchapter to unbundle.
Sec. 39.404. RATE FREEZE. Requires electric utilities subject to this
subchapter to freeze their rates until January 1, 2002. Requires the price
to beat to become effective January 1, 2002. Prohibits an electric utility
subject to this subchapter, for customer classes other than residential and
small commercial customers, from charging rates that are higher than the
rates that, on a bundled basis, were in effect January 1, 1999, until the
region qualifies for competition or until rates are reset.
Sec. 39.405. PILOT PROJECT. (a) Requires electric utilities subject to
this subchapter to undertake a pilot project. Requires PUC, as part of
approving an electric utility's transition to competition plan, to extend
the duration of the pilot project beyond January 1, 2002, and expand the
percentage of participation in the pilot project beyond the five percent
level prescribed by Section 39.104 based on the market conditions in the
region and consistent with the level of competition that the region can
support. Requires PUC to review the pilot project as circumstances change,
and authorizes PUC to adjust the percentage level of participation
consistent with this subsection.
(b) Requires an electric utility subject to this subchapter to design any
customer choice pilot project it undertakes in such a manner that there is
a proportional participation between customers receiving service from the
utility located in a service area that is certificated solely to the
utility and those customers of the utility that are located in a multiply
certificated area. Requires the utility to file reports with PUC to permit
it to monitor whether proportional participation is achieved. Provides
that nothing in this section requires a utility to design a pilot project
to serve in multiply certificated areas.
(c) Authorizes a proceeding under Section 36.102 (Statement of Intent to
Change Rates) or 36.151 (Unreasonable or Violative Existing Rates) to be
filed after January 1, 2006, to set its rates effective one year after the
date of the filing, if any electric utility subject to this subchapter
fails to meet the requirements of Section 39.152(a).
Sec. 39.406. PRICE TO BEAT. Requires the electric utilities subject to
this subchapter to include within their transition to competition plans a
provision to establish the price to beat. Authorizes PUC to reduce rates
by six percent unless it determines that a lesser reduction is necessary
and consistent with the capital requirements needed to develop the
infrastructure necessary to facilitate competition among electric
generators.
Sec. 39.407. RELEVANT MARKET AND RELATED MATTERS. (a) Requires PUC to
certify that the requirements of Section 39.152(a)(3) are met for electric
utilities subject to this subchapter, only upon a finding that the total
capacity owned and controlled by each such electric utility and its
affiliates does not exceed 20 percent of the total installed generation
capacity within the constrained geographic region served by each such
electric utility plus the total available transmission capacity capable of
delivering firm power and energy to that constrained geographic region.
(b) Provides that in the area of a power region served by an electric
utility subject to this subchapter, if customer choice is introduced before
the requirements of Section 39.152(a) are met, an affiliated retail
electric provider of an electric utility subject to this subchapter is
prohibited from competing for retail customers in any area of the power
region that is within the state and outside of the affiliated transmission
and distribution utility's certificated service area unless the affiliated
power generation company makes a commitment to maintain and does maintain
rates that are based on cost of service for any electric cooperative or
municipal utility that was a wholesale customer on January 1, 1999, and was
purchasing power at rates that were based on cost of service. Provides
that this subsection requires a power generation company to sell power at
rates that are based on cost of service, notwithstanding the expiration of
a contract for that service, until the requirements of Section 39.152(a)
are met.
(c) Provides that if the requirements of Section 39.152(a) have not been
met for an electric utility subject to this subchapter, then any power
generation company in the power region affiliated with an electric utility
subject to this subchapter is required to maintain adequate supply and
facilities to provide electric service to persons who were or would have
been retail customers of the affiliated retail electric provider on
December 31, 2001. Provides that the obligation provided by this
subsection remains in effect until PUC determines that the requirements of
Section 39.152(a) have been met for the region.
Sec. 39.408. USE OF REVENUES FOR UTILITIES WITH NO STRANDED COSTS.
Provides that in addition to the permitted uses for any positive difference
under the report required by Section 39.257(b) set forth in Section 39.255,
during the freeze period ending December 31, 2001, electric utilities
subject to this subchapter are authorized to request, subject to approval
by PUC, to use such positive differences to accelerate the amortization of
their regulatory assets.
SUBCHAPTER Z. MISCELLANEOUS PROVISIONS
Sec. 39.901. SCHOOL FUNDING LOSS MECHANISM. (a) Requires the
comptroller, no later than March 1 each year, to certify to the Texas
Education Agency any property wealth reductions, as determined by taking
the difference between current year and prior year appraisal values
attributable to electric utility restructuring.
(b) Requires the Texas Education Agency to determine the reduction of the
amount of property taxes recaptured by the state from school districts
subject to wealth equalization under Chapter 41 (Equalized Wealth Level),
Education Code, as a result of the property wealth reductions certified
under Subsection (a) and to notify PUC of the amount necessary to
compensate the state for the reduction.
(c) Requires the Texas Education Agency to determine the amount necessary
to compensate school districts for lost revenue resulting from the property
wealth reductions under Subsection (a) and to notify PUC of this amount.
Specifies the amounts necessary to compensate districts.
(d) Provides that the amounts determined by the comptroller and the Texas
Education Agency under this section, for the purposes of this section, are
final and are not appealable.
(e) Requires PUC, no later than May 1 of each year, to transfer from the
system benefit fund to the foundation school fund the amounts determined by
the Texas Education Agency under Subsections (b) and (c). Requires the
shortfall, if in any year the system benefit fund is insufficient to make
the transfer designated by the Texas Education Agency, to be included in
the projected revenue requirement for the system benefit fund the next time
PUC sets the fee under Section 39.903, and requires the shortfall amount to
be transferred to the Foundation School Program the following year.
Provides that the amounts transferred from the system benefit fund may be
appropriated only for the support of the foundation school program and are
available, in addition to any amounts allocated by the General
Appropriations Act, to finance actions under Section 41.002 (Equalized
Wealth Level) or 42.252 (Equalized Wealth Level), Education Code.
(f) Requires the Texas Education Agency, upon the transfer of funds from
the system benefit fund to the foundation school fund, to compensate school
districts for losses incurred under Subsection (c).
(g) Authorizes the commissioner of education and the comptroller to adopt
rules necessary to implement this section, including rules providing for
public input.
(h) Provides that this section is effective through the 2006-2007 school
year. Provides that this section expires August 31, 2007.
Sec. 39.902. CUSTOMER EDUCATION. (a) Requires PUC, on or before January
1, 2001, to develop and implement an educational program to inform
customers, including low-income and non-English-speaking customers, about
changes in the provision of electric service resulting from the opening of
the retail electric market and the customer choice pilot program under this
chapter. Requires the educational program to be neutral and nonpromotional
and to provide customers with the information necessary to make informed
decisions relating to the source and type of electric service available for
purchase and other information PUC considers necessary. Prohibits the
educational program from being targeted to areas served by municipally
owned utilities or electric cooperatives that have not adopted customer
choice. Requires PUC, in planning and implementing this program, to
consult with specified agencies and customers of and providers of retail
electric service. Authorizes PUC to enter contracts for professional
services to carry out the customer education program.
(b) Requires PUC to report on the status of the educational program,
developed and implemented, to the electric utility restructuring
legislative oversight committee on or before December 1, 2001.
(c) Requires PUC, after the opening of the retail electric market, to
conduct ongoing customer education designed to help customers make informed
choices of electric services and retail electric providers. Authorizes
PUC, as part of ongoing education, to provide customers information
concerning specific retail electric providers, including instances of
complaints against them and records relating to quality of customer
service.
Sec. 39.903. SYSTEM BENEFIT FUND. (a) Requires PUC to establish the
system benefit fund.
(b) Provides that the system benefit fund is financed by a nonbypassable
fee set by PUC in an amount not to exceed 50 cents per megawatt hour,
provided that, in any year, the sum of the revenue collected through the
nonbypassable fee and any retained surplus in the system benefit fund is
prohibited from exceeding 125 percent of the projected revenue requirements
for the fund.
(c) Prohibits the nonbypassable fee from being imposed on the retail
electric customers of a municipally owned utility or electric cooperative
before the sixth month preceding the date on which the utility or
cooperative implements customer choice. Requires PUC, on request by a
municipally owned utility or electric cooperative, to reduce the
nonbypassable fee imposed on retail electric customers served by the
municipally owned utility or electric cooperative by an amount equal to the
amount provided by the municipally owned utility or electric cooperative or
its ratepayers for local low-income programs and local programs that
educate customers about the retail electric market in a neutral and
nonpromotional manner.
(d) Requires PUC, not later than March 1 of each year, to review and
approve system benefit fund accounts, projected revenue requirements, and
proposed nonbypassable fees.
(e) Requires the system benefit fund to provide funding only for customer
education programs; programs to assist specified low-income electric
customers; and the school funding loss mechanism.
(f) Requires PUC to adopt rules regarding programs to assist low-income
electric customers, notwithstanding Section 39.106(b). Prohibits the
programs from being targeted to areas served by municipally owned utilities
or electric cooperatives that have not adopted customer choice. Sets
forth components of the program.
(g) Prohibits an electric utility from reducing programs already offered
to assist lowincome electric customers, until January 1, 2002.
(h) Requires PUC, following the introduction of customer choice, to adopt
rules to determine a reduced rate to be discounted off the standard retail
service package approved by PUC or the "price to beat," whichever is lower.
(i) Authorizes PUC to provide for a reduced rate during periods when
severe weather occurs or is likely to occur or for customers living in
all-electric dwelling units or who depend on electrically operated medical
equipment.
(j) Requires the reimbursement of a retail electric provider that is not
subject to the "price to beat" for the difference between the reduced rate
and the rate established pursuant to Section 39.106. Requires a retail
electric provider who is subject to the "price to beat" to be reimbursed
for the difference between the reduced rate and the "price to beat."
(k) Prohibits a retail electric provider from charging the customer a fee
for participation in the reduced rate program.
(l) Provides that a "low-income electric customer" is an electric customer
who is a qualifying low-income consumer as defined by PUC.
Sec. 39.904. GOAL FOR RENEWABLE ENERGY. (a) Provides that by January 1,
2009, an additional 2,000 megawatts of generating capacity from renewable
technologies will have been installed in this state. Requires the
cumulative installed renewable capacity in this state to total certain
megawatts by the specified dates.
(b) Requires PUC to establish a renewable energy credits trading program.
Requires a retail electric provider, municipally owned utility, or electric
cooperative that does not satisfy the requirements of Subsection (a) by
directly owning or purchasing capacity using renewable energy technologies
to purchase sufficient renewable energy credits to satisfy the requirements
by holding renewable energy credits in lieu of capacity from renewable
energy technologies.
(c) Requires PUC, no later than January 1, 2000, to adopt rules necessary
to administer and enforce this section. Requires the rules to at a minimum
achieve the enumerated goals.
(d) Defines "renewable energy technology."
(e) Authorizes a municipally owned utility operating a gas distribution
system to credit toward satisfaction of the requirements of this section
any production or acquisition of landfill gas supplied to the gas
distribution system based on a certain conversion calculation.
Sec. 39.9044. GOAL FOR NATURAL GAS. (a) Provides that 50 percent of the
megawatts of generating capacity installed in this state after January 1,
2000, use natural gas. Requires PUC, to the extent permitted by law, to
establish a program to encourage utilities to comply with this section by
using natural gas produced in this state as the preferential fuel.
Provides that this section does not apply to generating capacity for
renewable technologies.
(b) Requires PUC to establish a natural gas energy credits trading
program. Requires any power generation company, municipally owned utility,
or electric cooperative that does not satisfy the requirements of
Subsection (a) by directly owning or purchasing capacity using natural gas
technologies to purchase sufficient natural gas energy credits in lieu of
capacity from natural gas energy technologies.
(c) Requires PUC, not later than January 1, 2000, to adopt rules necessary
to administer and enforce this section and to perform any necessary studies
in cooperation with the Railroad Commission of Texas. Requires the rules,
at a minimum, to achieve the specified provisions.
(d) Requires PUC, with the assistance of the Railroad Commission of Texas,
to adopt rules allowing and encouraging retail electric providers and
municipally owned utilities and electric cooperatives that have adopted
customer choice to market electricity generated using natural gas produced
in this state as environmentally beneficial. Requires the rules to allow a
provider, municipally owned utility, or cooperative to achieve the
specified provisions.
(e) Defines "natural gas technology."
Sec. 39.9048. NATURAL GAS FUEL. Sets forth the intent of the legislature .
Sec. 39.905. GOAL FOR ENERGY EFFICIENCY. Sets forth certain energy
efficiency goals.
Sec. 39.906. DISPLACED WORKERS. Requires PUC, in order to mitigate
potential negative impacts on utility personnel directly affected by
electric industry restructuring, to allow the recovery of reasonable
employee related transition costs incurred and projected for severance,
retraining, early retirement, outplacement, and related expenses for the
employees.
Sec. 39.907. LEGISLATIVE OVERSIGHT COMMITTEE. (a) Provides that in this
section, "committee" means the electric utility restructuring legislative
oversight committee.
(b) Provides that the committee has six members and specifies the
composition of the committee.
(c) Provides that an appointed member of the committee serves at the
pleasure of the appointing official.
(d) Provides that the committee is subject to Chapter 325 (Texas Sunset
Act), Government Code and that the committee is abolished September 1,
2005, unless its existence is continued under that chapter.
(e) Requires the committee to meet at least annually with PUC; receive
information about rules relating to electric utility restructuring proposed
by PUC and may submit comments to PUC on such proposed rules; review
recommendations for legislation proposed by PUC; and monitor the
effectiveness of electric utility restructuring, including the fairness of
rates, the reliability of service, and the effect of stranded costs, market
power, and regulation on the normal forces of competition.
(f) Authorizes the committee to request reports and other information from
PUC as necessary to carry out this section.
(g) Requires the committee to report to the governor, lieutenant governor,
and speaker of the house of representatives on the committee's activities,
not later than November 15 of each even-numbered year. Requires the report
to include an analysis of any problems caused by electric utility
restructuring and recommendations of any legislative action necessary to
address such problems and to further retail competition within the electric
power industry.
Sec. 39.908. EFFECT OF SUNSET PROVISION. (a) Provides that this
subchapter continues in full force and effect if PUC is abolished and the
other provisions of this title expire as provided by Chapter 325,
Government Code.
(b) Requires the authorities, duties, and functions of PUC under this
chapter to be performed by a successor agency designated by the legislature
or secretary of state.
CHAPTER 40. COMPETITION FOR MUNICIPALLY OWNED UTILITIES
AND RIVER AUTHORITIES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 40.001. APPLICABLE LAW. (a) Provides that, except Sections 39.155,
39.157(e), 39.203, 39.903, and 39.904, this chapter governs the transition
to and the establishment of a fully competitive electric power industry for
municipally owned utilities, notwithstanding any other provision of law.
Provides that, with respect to the regulation of municipally owned
utilities, this chapter controls over any other provision of this title,
except for sections in which the term "municipally owned utility" is
specifically used.
(b) Provides that Chapter 39 does not apply to a river authority operating
a steam generating plant on or before January 1, 1999, or a corporation
authorized by Article 717p, V.T.C.S. (River authorities engaged in
distribution and sale of electrical energy) or Section 32.053 (Ability of
Certain River Authority Affiliates to Construct Improvements), except as
specifically provided in this subsection. Provides that a river authority
operating a steam generating plant on or before January 1, 1999, is subject
to specified sections of this Act.
(c) Prohibits, for purposes of Section 39.051, hydroelectric assets from
being deemed to be generating assets, and that the transfer of generating
assets to a corporation authorized by Article 717p, V.T.C.S., satisfies the
requirements of Section 39.051.
(d) Requires accommodation to be made in the code of conduct established
under Section 39.157(e) for the provisions of Article 717p, V.T.C.S., and
prohibits PUC from prohibiting a river authority and any related
corporation from sharing officers, directors, employees, equipment, and
facilities or from providing goods or services to each other at cost
without the need for a competitive bid.
Sec. 40.002. DEFINITION. Defines "body vested with the power to manage
and operate a municipally owned utility."
Sec. 40.003. SECURITIZATION. (a) Authorizes municipally owned utilities
and river authorities to adopt and use securitization provisions provided
by Subchapter G, Chapter 39, to recover their stranded costs at a recovery
level deemed appropriate by the municipally owned utility or river
authority up to 100 percent, under specified rules and procedures that are
required to be established.
(b) Authorizes municipalities, in order to implement securitization
financing under the rules and procedures established by and for a
municipally owned utility under Subsection (a)(1), to issue bonds, notes,
or other obligations including refunding bonds that are payable from and
secured by a lien on and pledge of the revenues collected under an order of
the municipality's governing body. Requires the bonds to be issued without
an election or any notice of intent to issue the bonds, by ordinance
adopted by the municipality's governing body, in the form and manner and
sold on a negotiated basis or upon receipt of bids and on the terms and
conditions as shall be determined by the governing body of the
municipality.
(c) Authorizes the bonds to be issued under the authority conferred by
Subsections (a)(1) and (2) and (b), with or without credit enhancement or
liquidity enhancement and using the procedures as provided by specified
laws applicable to the issuance of bonds, as if such laws were fully
restated. Provides that a municipality or river authority has the right and
authority to use other laws, notwithstanding any applicable restrictions
contained in those laws, to the extent convenient or necessary to carry out
any power or authority granted under this section, in issuing of bonds in
connection with securitization financing. Provides that the provisions
under this section are sufficient authority for the issuance of bonds,
notes, or other obligations, including refunding bonds, and the performance
of the other acts and procedures authorized, without reference to any other
laws or any restrictions or limitations contained in those laws. Provides
that to the extent of any conflict or inconsistency between the provisions
of this authorization and a provision of another law or home-rule charter,
the authorization and power to issue bonds conferred on municipalities or
river authorities under this section prevails.
(d) Requires the rules and procedures for securitization established by
PUC to include procedures for the recovery of qualified costs under the
terms of a financing order adopted by the governing body of the river
authority.
(e) Requires the rules and procedures for securitization to include rules
and procedures for the issuance of transition bonds. Provides that
findings made by the governing body of a river authority in a financing
order issued under the rules and procedures described in this subsection
are conclusive. Provides that any nonbypassable transition charge
incorporated in the rate order to recover the principal, interest, and
reasonable expenses associated with transition bonds constitutes property
rights, as described in Subchapter G, Chapter 39, and otherwise conform in
all material respects to the nonbypassable transition charges set forth in
Subchapter G, Chapter 39.
(f) Requires the rules and procedures established under this section to be
consistent with other law applicable to municipally owned utilities and
river authorities and with the terms of any resolutions, orders, charter
provisions, or ordinances authorizing outstanding bonds or other
indebtedness of the municipalities or river authorities.
Sec. 40.004. JURISDICTION OF COMMISSION. Provides that PUC has
jurisdiction over municipally owned utilities only for specified purposes.
SUBCHAPTER B. MUNICIPALLY OWNED UTILITY CHOICE
Sec. 40.051. GOVERNING BODY DECISION. (a) Provides that the municipal
governing body or a body vested with the power to manage and operate a
municipally owned utility has the discretion to decide when or if the
municipally owned utility will provide customer choice.
(b) Authorizes municipally owned utilities to choose to participate in
customer choice at any time on or after January 1, 2002, by the adoption of
an appropriate resolution of the municipal governing body or a body vested
with power to manage and operate the municipally owned utility. Provides
that the decision to participate in customer choice by the adoption of a
resolution is irrevocable.
(c) Provides that after a decision to offer customer choice has been made,
Subchapters D (Provisions Applicable to Appeal by Ratepayers Outside
Municipality) and E (Rate Determination and Appeal of Orders of Certain
Municipal Utilities), Chapter 33, do not apply to any action taken under
this chapter.
Sec. 40.052. UTILITY NOT OFFERING CUSTOMER CHOICE. (a) Prohibits a
municipally owned utility that has not chosen to participate in customer
choice from offering electric energy at unregulated prices directly to
retail customers outside its certificated retail service area.
(b) Provides that a municipally owned utility under Subsection (a) retains
the right to offer and provide a full range of customer service and pricing
programs to the customers within its certificated area and to purchase and
sell electric energy at wholesale without geographic restriction.
Sec. 40.053. RETAIL CUSTOMER'S RIGHT OF CHOICE. (a) Requires that, if a
municipally owned utility chooses to participate in customer choice, all
retail customers served by the municipally owned utility within the
certificated service area of the municipally owned utility have the right
of customer choice consistent with the provisions of this chapter, and
requires the municipally owned utility to provide open access for retail
service.
(b) Prohibits the metering function from being deemed a competitive
service for customers of the municipally owned utility within such service
area and provides that it may continue to be offered by the utility as sole
provider, at the option of the municipally owned utility and
notwithstanding Section 39.107.
(c) Requires a municipally owned utility, upon its initiation of customer
choice, to designate itself or another entity as the provider of last
resort for customers within the municipally owned utility's certificated
service area as that area existed on the date of the utility's initiation
of customer choice. Requires the municipally owned utility to fulfill the
role of default provider of last resort in the event no other entity is
available to act in that capacity.
(d) Requires the provider of last resort, if a customer is unable to
obtain service from a retail electric provider and upon request of the
customer, to offer the customer the standard retail service package for the
appropriate customer class, with no interruption of service, at a fixed,
nondiscountable rate that is at least sufficient to cover the reasonable
costs of providing such service, as approved by the governing body of the
municipally owned utility which has the authority to set rates.
(e) Authorizes the governing body of a municipally owned utility to
establish the procedures and criteria for designating the provider of last
resort and to redesignate the provider of last resort according to a
schedule it considers appropriate.
Sec. 40.054. SERVICE OUTSIDE AREA. (a) Requires a municipally owned
utility participating in customer choice to have the right to offer
electric energy and related services at unregulated prices directly to
retail customers who have customer choice without regard to geographic
location.
(b) Provides that in providing service under Subsection (a) to retail
customers outside its certificated retail service area as that area exists
on the date of adoption of customer choice, a municipally owned utility is
subject to PUC's rules establishing a code of conduct regulating
anticompetitive practices.
(c) Provides that for municipally owned utilities participating in
customer choice, PUC has jurisdiction to establish terms and conditions,
but not rates, for access by other retail electric providers to the
municipally owned utility's distribution facilities.
(d) Requires accommodation to be made in PUC's terms and conditions for
access and in the code of conduct for specific legal requirements imposed
by state or federal law applicable to municipally owned utilities.
(e) Provides that PUC does not have jurisdiction to require unbundling of
services or functions of, or to regulate the recovery of stranded
investment of, a municipally owned utility or, except as provided by this
section, jurisdiction with respect to the rates, terms, and conditions of
service for retail customers of a municipally owned utility within the
utility's certificated service area.
(f) Requires a municipally owned utility to maintain separate books and
records of its operations from those of the operations of any affiliate.
Sec. 40.055. JURISDICTION OF MUNICIPAL GOVERNING BODY. (a) Provides that
the municipal governing body or a body vested with the power to manage and
operate a municipally owned utility has exclusive jurisdiction to:
(1) set all terms of access, conditions, and rates applicable to services
provided by the utility, including nondiscriminatory and comparable rates
for distribution but excluding wholesale transmission rates, terms of
access, and conditions for wholesale transmission service set by PUC under
this subtitle (Electric Utilities), provided that the rates for
distribution access established by the municipal governing body are be
comparable to the distribution access rates that apply to the municipally
owned utility and the municipally owned utility's affiliates;
(2) determine whether to unbundle any energy-related activities and, if
the municipally owned utility chooses to unbundle, whether to do so
structurally or functionally;
(3) reasonably determine the amount of the municipally owned utility's
stranded investment;
(4) establish nondiscriminatory transition charges designed to recover the
stranded investment over an appropriate period of time, provided that
recovery of retail stranded costs are from all existing or future retail
customers within the utility's geographical certificated service area as it
existed on May 1, 1999;
(5) determine the extent to which the municipally owned utility will
provide various customer services at the distribution level or will accept
the services from other providers;
(6) manage and operate the municipality's electric utility systems,
including exercise of control over resource acquisition and any related
expansion programs;
(7) establish and enforce service quality and reliability standards and
consumer safeguards designed to protect retail electric customers
consistent with this chapter;
(8) determine whether a base rate reduction is appropriate for the
municipally owned utility;
(9) determine any other utility matters that the municipal governing body
or body vested with power to manage and operate the municipally owned
utility believes should be included; and
(10) make any other decisions affecting the municipally owned utility's
participation in customer choice that are not inconsistent with this
chapter.
(b) Prohibits a retail customer, in multiply certificated areas, including
a retail customer of an electric cooperative or a municipally owned
utility, from avoiding stranded cost recovery charges by switching to
another electric utility, electric cooperative, or municipally owned
utility.
Sec. 40.056. ANTICOMPETITIVE ACTIONS. (a) Requires PUC, if, on
complaint by a retail electric provider, PUC finds that a municipal rule,
action, or order relating to customer choice is anticompetitive or does not
provide other retail electric providers with nondiscriminatory terms and
conditions of access to distribution facilities or customers within the
utility's certificated retail service area that are comparable to the
municipally owned utility's and its affiliates' terms and conditions of
access to distribution facilities or customers, to notify the municipally
owned utility.
(b) Requires the municipally owned utility to be given three months to cure
the anticompetitive or noncompliant behavior described in Subsection (a),
following opportunity for hearing on the complaint. Authorizes PUC, if the
noncompliant behavior is not fully remedied within that time, to prohibit
the municipally owned utility or affiliate from providing retail service
outside its certificated retail service area until the rule, action, or
order is remedied.
Sec. 40.057. BILLING. (a) Authorizes a municipally owned utility that
opts for customer choice to continue to bill electric customers located in
its certificated retail service area, as that area exists on the date of
adoption of customer choice for transmission and distribution services.
Authorizes the utility to bill directly for generation services and
customer services provided by the municipally owned utility to those
customers.
(b) Prohibits a municipally owned utility that opts for customer choice
from adopting anticompetitive billing practices that would discourage
customers in its service area from choosing a retail electric provider.
(c) Provides that a customer that is being provided wires service by a
municipally owned utility at distribution or transmission voltage and that
is served by a retail electric provider for retail service has the option
of being billed directly by each service provider or to receive a single
bill for distribution, transmission, and generation services from the
municipally owned utility.
Sec. 40.058. TARIFFS FOR OPEN ACCESS. Requires a municipally owned
utility that owns or operates transmission and distribution facilities to
file with PUC tariffs implementing the open access rules established by PUC
and rates for open access on distribution facilities as set by the
municipal regulatory authority, before the 90th day preceding the date the
utility offers customer choice. Provides that PUC does not have authority
to determine the rates for distribution access service for a municipally
owned utility.
Sec. 40.059. MUNICIPAL POWER AGENCY; RECOVERY OF STRANDED COSTS. (a)
Defines "member city."
(b) Authorizes a member city, after its adoption of a resolution choosing
to participate in customer choice, to include stranded costs described in
Subsection (c) in its distribution costs and may recover those costs
through a nonbypassable charge. Requires the nonbypassable charge to be
determined by the member city's governing body and may be spread over 16
years.
(c) Provides that the stranded costs that may be recovered under this
section are those costs that were determined by PUC and stated in PUC's
April 1998 Report to the Texas Senate Interim Committee on Electric Utility
Restructuring entitled "Potentially Strandable Investment (ECOM) Report:
1998 Update" and specifically stated in the report at Appendix A (ECOM
Estimates Including the Effects of Transition Plans) under PUC base case
benchmark base market price for the year 2002.
(d) Prohibits the stranded cost amounts described in this section from
being included in the generation costs used in setting rates by the member
city's governing body.
(e) Provides that the provisions of this section are cumulative of all
other provisions of this chapter, and prohibits this section from being
construed to limit or restrict the application of any provision of this
chapter to the member cities.
(f) Requires the municipal power agency to extinguish the agency's
indebtedness by sale of the electric facility to one or more purchasers, by
way of a sale through the issuance of taxable or tax-exempt debt to the
member cities, or by any other method. Requires the agency to set as an
objective the extinguishment of the agency's debt by September 1, 2000.
Requires the agency, if this objective is not met, to provide detailed
reasons to the electric utility restructuring legislative oversight
committee by November 1, 2000, why the agency was not able to meet this
objective.
(g) Authorizes the municipal power agency or its successor in interest to
use the rate of return method for calculating its transmission cost of
service. Provides that if the rate of return method is used, the return
component for the transmission cost of service revenue requirement is
sufficient to meet the transmission function's pro rata share of levelized
debt service and debt service coverage ratio (1.50) and other annual debt
obligations, provided, however, that the total levelized debt service may
not exceed the total debt service under the current payment schedule.
Requires any additional revenue generated by the methodology described in
this subsection to be applied to reduce the agency's outstanding
indebtedness.
Sec. 40.060. NO POWER TO AMEND CERTIFICATES. Provides that nothing in
this chapter empowers a municipal governing body or a body vested with the
power to manage and operate a municipally owned utility to issue, amend, or
rescind a certificate of public convenience and necessity granted by PUC.
Provides that this subsection does not affect the ability of a municipal
governing body or a body vested with the power to manage and operate the
municipally owned utility to pass a resolution.
Sec. 40.061. UNAUTHORIZED RETAIL ACCESS TO DISTRIBUTION FACILITIES.
Prohibits a municipally owned utility that has not adopted customer choice
from being required to provide access over its facilities for service to
its retail customer in its certificated service area.
SUBCHAPTER C. RIGHTS NOT AFFECTED
Sec. 40.101. INTERFERENCE WITH CONTRACT. (a) Prohibits this subtitle
from interfering with or abrogating the rights or obligations of parties,
including a retail or wholesale customer, to a contract with a municipally
owned utility or river authority.
(b) Prohibits this subtitle from interfering with or abrogating the rights
or obligations of a party under a contract or agreement concerning
certificated utility service areas.
Sec. 40.102. ACCESS TO WHOLESALE MARKET. Prohibits this subtitle from
limiting the access of municipally owned utilities to the wholesale
electric market.
Sec. 40.103. PROTECTION OF BONDHOLDERS. Prohibits this subtitle or any
rule adopted under this subtitle from impairing contracts, covenants, or
obligations between this state, river authorities, municipalities, and the
bondholders of revenue bonds issued by the river authorities or
municipalities.
Sec. 40.104. TAX-EXEMPT STATUS. Prohibits this subtitle from impairing
the tax-exempt status of municipalities, electric cooperatives, or river
authorities, or from compelling any municipality, electric cooperative, or
river authority to use its facilities in a manner that violates any
contractual provisions, bond covenants, or other restrictions applicable to
facilities financed by tax-exempt debt. Provides that the decision to
participate in customer choice by the adoption of a resolution is
irrevocable, notwithstanding any other provision of law.
CHAPTER 41. ELECTRIC COOPERATIVES AND COMPETITION
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 41.001. APPLICABLE LAW. Provides that, notwithstanding any other
provision of law, except Sections 39.155, 39.157(e), 39.203, 39.903, and
39.904, this chapter governs the transition to and the establishment of a
fully competitive electric power industry for electric cooperatives.
Provides that this chapter controls over any other provision of this title
regarding the regulation of electric cooperatives, except for sections in
which the term "electric cooperative" is specifically used.
Sec. 41.002. DEFINITIONS. Defines "board of directors," "rate," and
"stranded investment."
Sec. 41.003. SECURITIZATION. (a) Authorizes an electric cooperative to
adopt and use securitization provisions having the effect of the provisions
set out in Subchapter G, Chapter 39, to recover through rates stranded
costs at a recovery level deemed appropriate by the board of directors up
to 100 percent, under rules and procedures established by PUC.
(b) Requires the rules and procedures for securitization established under
Subsection (a) to include rules and procedures for the recovery of stranded
costs pursuant to the terms of a rate order adopted by the board of
directors of the electric cooperative, which has the effect of a financing
order.
(c) Requires the rules and procedures established by PUC under Subsection
(b) to include rules and procedures for the issuance of transition bonds
issued in a securitized financing transaction. Authorizes the issuance of
any transition bonds issued in a securitized financing transaction by an
electric cooperative. Provides that the issuance of such bonds is governed
by the laws governing the issuance of bonds or other obligations by the
electric cooperative. Provides that findings made by the board of
directors of an electric cooperative in a rate order issued under the rules
and procedures described by this subsection are conclusive, and requires
any transition charges incorporated in such rate order to recover the
principal, interest, and all reasonable expenses associated with any
securitized financing transaction to constitute property rights and to
otherwise conform in all material respects to the transition charges
provided by Subchapter G, Chapter 39.
Sec. 41.004. JURISDICTION OF COMMISSION. Provides that, except as
specifically provided otherwise in this chapter, PUC has jurisdiction over
electric cooperatives only to:
(1) regulate wholesale transmission rates and service including terms of
access, to the extent provided in Subchapter A (Competition and
Transmission Access in the Wholesale Market), Chapter 35 (Alternative
Energy Providers);
(2) regulate certification to the extent provided in Chapter 37
(Certificates of Convenience and Necessity);
(3) establish a code of conduct;
(4) establish terms and conditions, but not rates, for open access to
distribution facilities for electric cooperatives providing customer
choice; and
(5) require reports of electric cooperative operations only to the extent
necessary to ensure the public safety, enable PUC to satisfy its
responsibilities relating to electric cooperatives under this chapter,
enable PUC to determine the aggregate electric load and energy requirements
in the state and the resources available to serve that load, or enable PUC
to determine information relating to market power.
Sec. 41.005. LIMITATION ON MUNICIPAL AUTHORITY. Prohibits a municipality
from directly or indirectly regulating the rates, operations, and services
of an electric cooperative, except, with respect to operations, to the
extent necessary to protect the public health, safety, or welfare.
Provides that this section does not prohibit a municipality from making a
lawful charge for the use of public rights-of-way within the municipality
as provided by Section 182.025 (Charges by a City), Tax Code, and Section
33.008. Requires an electric cooperative to be an electric utility for
purposes of Section 182.025, Tax Code, and Section 33.008.
SUBCHAPTER B. ELECTRIC COOPERATIVE UTILITY CHOICE
Sec. 41.051. BOARD DECISION. (a) Provides that the board of directors has
the discretion to decide when or if the electric cooperative will provide
customer choice.
(b) Authorizes electric cooperatives that choose to participate in
customer choice to do so at any time on or after January 1, 2002, by
adoption of an appropriate resolution of the board of directors.
Authorizes the revocation of the decision to participate in customer choice
by the adoption of a resolution if no customer has opted for choice within
four years of the resolution's adoption. Authorizes an electric
cooperative to initiate a customer choice pilot project at any time.
Sec. 41.052. ELECTRIC COOPERATIVES NOT OFFERING CUSTOMER CHOICE. (a)
Prohibits an electric cooperative that chooses not to participate in
customer choice from offering electric energy at unregulated prices
directly to retail customers outside its certificated retail service area.
(b) Provides that an electric cooperative under Subsection (a) retains
the right to offer and provide a full range of customer service and pricing
programs to the customers within its certificated retail service area and
to purchase and sell electric energy at wholesale without geographic
restriction.
(c) Authorizes a generation and transmission electric cooperative to offer
electric energy at unregulated prices directly to retail customers outside
of its parent electric cooperatives' certificated service areas only if a
majority of the parent electric cooperatives of the generation and
transmission electric cooperative have chosen to offer customer choice.
(d) Prohibits a subsidiary of an electric cooperative from providing
electric energy at unregulated prices outside of its parent electric
cooperative's certificated retail service area unless the electric
cooperative offers customer choice inside its certificated retail service
area.
Sec. 41.053. RETAIL CUSTOMER RIGHT OF CHOICE. (a) Requires, if an
electric cooperative chooses to participate in customer choice, all retail
customers within the certificated service area of the electric cooperative
to have the right of customer choice, and requires the electric cooperative
to provide nondiscriminatory open access for retail service.
(b) Prohibits the metering function from being deemed a competitive
service for customers of the electric cooperative within that service area
and provides that it may continue to be offered by the electric cooperative
as sole provider, at the option of the electric cooperative and
notwithstanding Section 39.107.
(c) Requires an electric cooperative, on its initiation of customer choice,
to designate itself or another entity as the provider of last resort for
retail customers within the electric cooperative's certificated service
area and to fulfill the role of default provider of last resort in the
event no other entity is available to act in that capacity.
(d) Requires the provider of last resort, if a retail electric provider
fails to serve a customer described in Subsection (c) and on request by the
customer, to offer the customer the standard retail service package for the
appropriate customer class, with no interruption of service, at a fixed,
nondiscountable rate that is at least sufficient to cover the reasonable
costs of providing such service, as approved by the board of directors.
(e) Authorizes the board of directors to establish the procedures and
criteria for designating the provider of last resort and to redesignate the
provider of last resort according to a schedule it considers appropriate.
Sec. 41.054. SERVICE OUTSIDE CERTIFICATED AREA. (a) Provides that,
notwithstanding any provisions of Chapter 161 (Electric Cooperative
Corporations), an electric cooperative participating in customer choice has
the right to offer electric energy and related services at unregulated
prices directly to retail customers who have customer choice without regard
to geographic location. Authorizes any person, notwithstanding any
provisions of Chapter 161, and without restriction, except as may be
provided in the electric cooperative's articles of incorporation and
bylaws, to be a member of an electric cooperative.
(b) Provides that an electric cooperative that provides service under
Subsection (a) to retail customers outside its certificated service area,
as that area exists on the date of adoption of customer choice, is subject
to commission jurisdiction as to PUC's rules establishing a code of conduct
regulating anticompetitive practices, except to the extent such rules
conflict with this chapter.
(c) Establishes that PUC, for electric cooperatives participating in
customer choice, has jurisdiction to establish terms and conditions, but
not rates, for access by other electric providers to the electric
cooperative's distribution facilities.
(d) Requires PUC to make accommodation in the code of conduct for specific
legal requirements imposed by state or federal law applicable to electric
cooperatives, notwithstanding Subsections (b) and (c). Requires PUC to
accommodate the organizational structures of electric cooperatives and
prohibits PUC from prohibiting an electric cooperative and any related
entity from sharing officers, directors, or employees.
(e) Provides that PUC does not have jurisdiction to require the unbundling
of services or functions of, or to regulate the recovery of stranded
investment of, an electric cooperative or, except as provided by this
section, jurisdiction with respect to the rates, terms, and conditions of
service for retail customers of an electric cooperative within the electric
cooperative's certificated service area.
(f) Requires an electric cooperative to maintain separate books and
records of its operations and the operations of any subsidiary and to
ensure that the rates charged for provision of electric service do not
include any costs of its subsidiary or any other costs not related to the
provision of electric service.
Sec. 41.055. JURISDICTION OF BOARD OF DIRECTORS. Sets forth the exclusive
jurisdiction of a board of directors.
Sec. 41.056. ANTICOMPETITIVE ACTIONS. (a) Requires PUC, if it finds
after notice and hearing that an electric cooperative providing customer
choice has engaged in anticompetitive behavior by not providing other
retail electric providers with nondiscriminatory terms and conditions of
access to distribution facilities or customers within the electric
cooperative's certificated service area that are comparable to the electric
cooperative's and its subsidiaries' terms and conditions of access to
distribution facilities or customers, to notify the electric cooperative.
(b) Requires the electric cooperative to have three months to cure the
anticompetitive or noncompliant behavior described in Subsection (a).
Authorizes PUC to prohibit the electric cooperative or its subsidiary from
providing retail service outside its certificated retail service area until
the behavior is remedied if the behavior is not fully remedied within that
time.
Sec. 41.057. BILLING. (a) Authorizes an electric cooperative that opts
for customer choice to continue to bill directly electric customers located
in its certificated service area for all transmission and distribution
services. Authorizes the electric cooperative to bill directly for
generation and customer services provided by the electric cooperative or
its subsidiaries to those customers.
(b) Entitles a customer served by an electric cooperative for transmission
and distribution services and by a retail electric provider for retail
service to the option of being billed directly by each service provider or
receiving a single bill for distribution, transmission, and generation
services from the electric cooperative.
Sec. 41.058. TARIFFS FOR OPEN ACCESS. Requires an electric cooperative
that owns or operates transmission and distribution facilities to file
tariffs implementing the open access rules established by PUC with the
appropriate regulatory authorities having jurisdiction before the 90th day
preceding the date the electric cooperative offers customer choice.
Sec. 41.059. NO POWER TO AMEND CERTIFICATES. Provides that this chapter
does not empower a board of directors to issue, amend, or rescind a
certificate of public convenience and necessity granted by PUC.
Sec. 41.060. CUSTOMER SERVICE INFORMATION. (a) Requires PUC to keep
information submitted by customers and retail electric providers pertaining
to the provision of electric service by electric cooperatives.
(b) Requires PUC to notify the appropriate electric cooperative of
information submitted by a customer or retail electric provider, and
requires the electric cooperative to respond to the customer or retail
electric provider. Requires the electric cooperative to notify PUC of its
response.
(c) Requires PUC to prepare a report for the Sunset Advisory Commission
that includes information submitted and responses by electric cooperatives
in accordance with the Sunset Advisory Commission's schedule for reviewing
PUC.
Sec. 41.061. RETAIL RATE CHANGES BY ELECTRIC COOPERATIVES. (a) Provides
that this section applies to retail rates of an electric cooperative that
has not adopted customer choice and to the retail delivery rates of an
electric cooperative that has adopted customer choice. Provides that this
section does not apply to rates for sales of electric energy by an electric
cooperative that has adopted customer choice or wholesale sales of electric
energy.
(b) Authorizes an electric cooperative to change its rates by adopting a
resolution approving the proposed change, mailing notice of the proposed
change to each affected customer whose rate would be increased by the
proposed change at least 30 days before implementation of the proposed
change, which notice may be included in a monthly billing, and holding a
meeting to discuss the proposed rate changes with affected customers, if
any change is expected to increase total system annual revenues by more
than $100,000 or one percent, whichever is greater.
(c) Authorizes an electric cooperative to implement the proposed rates on
completion of the requirements under Subsection (b). Provides that those
rates remain in effect until changed by the electric cooperative as
provided by this section or, for rates other than retail delivery rates,
until this section is no longer applicable because the electric cooperative
adopts customer choice.
(d) Authorizes the electric cooperative to reconsider a rate change at any
time and adjust the rate by board resolution without additional notice or
meeting of customers if the rate as adjusted is not expected to increase
the revenues from a customer class. Authorizes the rates for the customer
class, if notice is given to a customer class that would receive an
increase as a result of the adjustment, to be increased without additional
meeting of the customers. Authorizes a customer to petition to appeal
within the time provided in Subsection (f).
(e) Requires retail rates set by an electric cooperative that has not
adopted customer choice and retail delivery rates set by an electric
cooperative that has adopted customer choice to be just and reasonable, not
unreasonably preferential, prejudicial, or discriminatory. Authorizes an
electric cooperative, if the customer agrees, to charge market-based rates
to customers who have energy supply options if rates are not increased for
other customers as a result.
(f) Provides that a customer of the electric cooperative who is adversely
affected by a rate setting resolution of the electric cooperative is
entitled to judicial review. Provides that a person initiates judicial
review by filing a petition in the Travis County district court no later
than the 90th day after the date the resolution is implemented.
(g) Provides that the resolution of the electric cooperative setting
rates, as it may have been amended as described in Subsection (d), is
presumed valid, and that the burden of showing that the resolution is
invalid rests on the persons challenging the resolution. Authorizes a court
reviewing a change of rate or rates by an electric cooperative to consider
any relevant factor including the cost of providing service.
(h) Requires the court, if the court finds that the electric
cooperative's resolution setting rates violates the standards contained in
Subsection (e), or that the electric cooperative's rate violates Subsection
(e), to enter an order:
(1) stating the specific basis for its determination that the rates set in
the electric cooperative's resolution violate Subsection (e); and
(2) directing the electric cooperative to set revised retail rates within
60 days that do not violate the standards of Subsection (e) and refund or
credit against future bills, at the electric cooperative's option, revenues
collected under the rate found to violate the standards of Subsection (e)
that exceed the revenues that would have been collected under the revised
rates. Requires the refund or credit to be made over a period of not more
than 12 months, as determined by the court.
(i) Prohibits a court from entering an order that delays or prohibits
implementation of a rate change or set revised rates either for the period
the challenged resolution was in effect or prospectively.
(j) Authorizes a person having obtained an order of the court requiring an
electric cooperative to set revised retail rates pursuant to Subsection
(h)(2)(a), to initiate an original proceeding in the district court of
Travis County, once the order is no longer subject to appeal, either to:
(1) seek enforcement of the court's order by writ of mandamus; or
(2) seek judicial review of the electric cooperative's most current
resolution setting rates as provided in this section.
(k) Requires an electric cooperative that has not adopted customer choice
and that has not changed each of its nonresidential rates since January 1,
1999, to adopt a resolution setting rates on or before May 1, 2002.
Requires the resolution to be subject to judicial review as provided in
this section whether or not any rate is changed. Authorizes a customer, in
the event the electric cooperative fails to adopt a resolution setting
rates pursuant to this subsection, to petition for judicial review of the
electric cooperative's rates. Sets forth the procedure to initiate
judicial review.
Sec. 41.062. ALLOCATION OF STRANDED INVESTMENT. Requires a competition
transition charge to be allocated among retail customer classes based on
the relevant customer class characteristics as of the end of the electric
cooperative's most recent fiscal year prior to implementation of customer
choice, in accordance with specified methodology. Prohibits a retail
customer in multiply certificated areas from avoiding stranded cost
recovery charges by switching to another electric cooperative, an electric
utility, or a municipally owned utility.
Sec. 41.063. RETAIL RATES OF SUCCESSOR ELECTRIC UTILITY TO ELECTRIC
COOPERATIVE. (a) Provides that for the purposes of this section, an
electric cooperative as described by Section 11.003 is a "successor
cooperative" and the rates of a successor cooperative are subject to this
section. Provides that, effective January 1, 2000, a customer of a
successor cooperative is entitled to judicial review by a filing a
petition, if the customer has reason to believe the customer is being
charged a rate in violation of Subsection (b). The customer has the burden
of proving the rate violated Subsection (b).
(b) Requires retail rates of a successor cooperative to be just and
reasonable and not unreasonable preferential, prejudicial, or
discriminatory. Authorizes a successor cooperative to charge a lower,
market-based rate to customers who have energy supply options, and in that
event, the standards that would otherwise govern the rates charge to other
customers are modified only the minimum extent necessary to enable those
customers having energy supply options to receive lower, market-based
rates.
(c) Authorizes a court reviewing the successor cooperative rate to consider
any relevant factor that may be considered by a court in reviewing a
decision of the commission, including the cost of providing service.
(d) Requires the court, if the court finds that the successor
cooperative's rate violates the standards contained in Subsection (b), to
enter an order:
(1) stating the specific basis for its determination that the rate violates
Subsection (b); and
(2) directing the successor cooperative to set a revised retail rate,
within 60 days, that does not violate the standards of Subsection (b); and
refund or credit against future bills, at the successor cooperative's
option, revenues collected under the rate found to violate the standards of
Subsection (b) that exceed the revenues that would have been collected
under the revised rates.
(e) Requires the refund or credit to be made over a period of not more than
12 months. Requires the court, if the court has ordered relief under
Subsection (d) and it finds that the successor cooperative's resolution
setting rates still violates the standards of Subsection (b), to enter an
order imposing authorized sanctions.
(f) Provides that the court is prohibited from ordering remedies other than
those under proposed Subsections (d) and (e). Prohibits the court from
setting revised rates either for the period the challenged resolution was
in effect or prospectively.
Sec. 41.064. UNAUTHORIZED RETAIL ACCESS TO DISTRIBUTION FACILITIES.
Prohibits an electric cooperative that has not adopted customer choice from
being required to provide access over its facilities for service to its
retail customers in its certificated service area.
SUBCHAPTER C. RIGHTS NOT AFFECTED
Sec. 41.101. INTERFERENCE WITH CONTRACT. (a) Provides that this subtitle
may not interfere with or abrogate the rights or obligations of parties,
including a retail or wholesale customer, to a contract with an electric
cooperative or its subsidiary.
(b) Provides that no provision of this subtitle may interfere with or be
deemed to abrogate the rights or obligations of a party under a contract or
agreement concerning certificated service areas.
Sec. 41.102. ACCESS TO WHOLESALE MARKET. Provides that nothing in this
subtitle shall limit the access of an electric cooperative or its
subsidiary, either on its own behalf or on behalf of its customers, to the
wholesale electric market.
Sec. 41.103. PROTECTION OF BONDHOLDERS. Provides that nothing in this
subtitle or any rule adopted under this subtitle shall impair contracts,
covenants, or obligations between an electric cooperative and its lenders
and holders of bonds issued on behalf of or by the electric cooperative.
Sec. 41.104. TAX-EXEMPT STATUS. Provides that nothing in this subtitle
may impair the tax-exempt status of electric cooperatives, nor shall
anything in this subtitle compel any electric cooperative to use its
facilities in a manner that violates any contractual provisions, bond
covenants, or other restrictions applicable to facilities financed by
tax-exempt or federally insured or guaranteed debt.
SECTION 41. Amends Section 252.022, Local Government Code, by amending
Subsection (a) and adding Subsection (c), as follows:
(a) Deletes electricity from the procured items that are available from
only one source for which Chapter 252, Local Government Code, is
inapplicable. Includes electricity as an item to which Chapter 252 does
not apply to as an expenditure.
(c) Provides that this chapter does not apply to expenditures by a
municipally owned electric or gas utility or unbundled divisions of a
municipally owned electric or gas utility in connection with any purchases
by the municipally owned utility or divisions of a municipally owned
utility made in accordance with procurement procedures adopted by a
resolution of the body vested with authority for management and operation
of the municipally owned utility or its divisions that sets out the public
purpose to be achieved by such procedures. Provides that this subsection
does not exempt a municipally owned utility from any other applicable
statute, charter provision, or ordinance.
SECTION 42. Amends Subtitle C, Title 9, Local Government Code, by adding
Chapter 303, as follows:
CHAPTER 303. ENERGY AGGREGATION MEASURES
FOR LOCAL GOVERNMENTS
Section 303.001. AGGREGATION BY POLITICAL SUBDIVISIONS. (a) Defines
"political subdivision."
(b) Authorizes a political subdivision to join with another subdivision or
subdivisions to form a political subdivision corporation or corporations to
act as an agent to negotiate the purchase of electricity or to aid or act
on behalf of the subdivisions, with respect to their own electricity use
for their respective public facilities.
(c) Provides that the articles of incorporation and the bylaws of a
political subdivision corporation must be approved by ordinance,
resolution, or order adopted by each political participating subdivision's
governing body.
(d) Authorizes a subdivision corporation to negotiate for the purchase of
electricity, make contracts for that purpose, purchase electricity for use
in public facilities of a participating, political subdivision, and take
any other action for that purpose. Defines "electricity."
(e) Authorizes a subdivision corporation to recover its expenses through
the assessment of dues to each participating subdivision or through an
aggregation fee charged per kilowatt hour, or a combination of both.
(f) Authorizes a subdivision corporation to appear before certain state
agencies, regulatory authorities, the Texas Legislature, and the courts.
(g) Provides that a subdivision corporation has the powers of a nonprofit
corporation and such other powers as specified in Section 39.3545,
Utilities Code.
(h) Provides that the provisions of the Texas Non-Profit Corporation Act
that relate to powers, standards of conduct, and interests in contracts
apply to the directors and officers of a political subdivision corporation.
(i) Provides that a member of the board of directors of a political
subdivision corporation is not a public official by virtue of that
position, and authorizes a member to be elected to serve as a political
subdivision official or to be employed by a political subdivision.
Sec. 303.002. AGGREGATION BY POLITICAL SUBDIVISION FOR CITIZENS. (a)
Authorizes a political subdivision aggregator to negotiate for the purchase
of electricity and energy services on behalf of the political subdivision's
citizens. Provides that the citizens must affirmatively request to be
includes in the aggregation services.
(b) Authorizes a political subdivision to contract with a third party or
another aggregator to administer the aggregation of electricity and energy
services.
(c) Authorizes the political subdivision aggregator to use any mailing from
the subdivision to invite participation by its citizens.
SECTION 43. Amends Section 272.001, Local Government Code, by adding
Subsection (j), to provide that this section does not apply to sales or
exchanges of land owned by a municipality operating a municipally owned
electric or gas utility if the land is held or managed by the municipally
owned utility, or by a division of the municipally owned electric or gas
utility that constitutes the unbundled electric or gas operations of the
utility, if the governing body of the municipally owned utility adopts a
resolution stating the conditions and circumstances for the sale or
exchange and the public purpose that will be achieved by the sale or
exchange. Provides that for purposes of this subsection, "municipally
owned utility" includes a river authority engaged in the generation,
transmission, or distribution of electric energy to the public, and
"unbundled" operations are those operations of the utility that have been
functionally separated.
SECTION 44. Amends Subsection (c), Section 402.002, Local Government Code,
to authorize a municipality to manufacture its own electricity, gas, or
anything else needed or used by the public. Authorizes a municipality to
purchase, and make contracts for the purchase of, gas, electricity, oil, or
any other commodity or article used by the public and may sell it to the
public on terms as provided by the municipal charter, ordinance, or
resolution of the governing body of the municipally owned utility.
SECTION 45. Amends Subchapter D, Chapter 551, Government Code, by adding
Section 551.086, as follows:
Sec. 551.086. CERTAIN PUBLIC POWER UTILITIES: COMPETITIVE MATTERS. (a)
Provides that , notwithstanding anything in this chapter to the contrary,
the rules provided by this section apply to competitive matters of a public
power utility.
(b) Defines "public power utility," "public power utility governing body,"
and "competitive matter."
(c) Provides that this chapter does not require a public power utility
governing body to conduct an open meeting to deliberate, vote, or take
final action on any competitive matter. Provides that a public power
utility governing body must make a good-faith determination, by majority
vote of its members, that a matter is a competitive matter before a public
power utility governing body may deliberate, vote, or take final action on
any such competitive matter in a closed meeting. Requires the vote to be
taken during the closed meeting and be included in the certified agenda or
tape recording of the closed meeting. Prohibits a public power utility
governing body from deliberating or taking any further action on the matter
in the closed meeting if it fails to determine by such vote that the matter
satisfies the requirements of a competitive matter. Provides that this
section does not limit the right of a public power utility governing body
to hold a closed session pursuant to any other exception provided for in
this chapter.
(d) Provides that for purposes of Section 551.041, the notice of the
subject matter of an item that may be considered as a competitive matter is
required to contain no more than a general representation of the subject
matter to be considered so that the competitive activity of the public
power utility with respect to the issue in question is not compromised or
disclosed.
(e) Provides that with respect to municipally owned utilities subject to
this section, this section applies whether or not the municipally owned
utility has adopted customer choice or serves in a multiply certificated
service area under the Utilities Code.
(f) Provides that this section is not intended to preclude the application
of the enforcement and remedies provisions of Subchapter G.
SECTION 46. Amends Subchapter C, Chapter 552, Government Code, by adding
Section 552.131, as follows:
Sec. 552.131. EXCEPTION: PUBLIC POWER UTILITY COMPETITIVE MATTERS. (a)
Defines, for purposes of this section, "public power utility," "public
power utility governing body," and "competitive matter."
(b) Provides that information or records are excepted from the
requirements of Section 552.021 if the information or records are
reasonably related to a competitive matter. Provides that such information
or records include the text of any resolution of the public power utility
governing body determining which issues, activities, or matters constitute
competitive matters. Provides that information or records of a municipally
owned utility that are reasonably related to a competitive matter are not
subject to disclosure under this chapter. Provides that this section does
not limit the right of a public power utility governing body to withhold
from disclosure information deemed to be within the scope of any other
exception provided for in this chapter, subject to the provisions of this
chapter.
(c) Requires the attorney general, in rendering a written opinion relating
to information alleged to fall under this exception, to find the requested
information to be outside the scope of this exception only if the attorney
general determines, based on the information provided in the request, that
the public power utility governing body has failed to act in good faith in
making the determination that the issue, matter, or activity in question is
a competitive matter or that the information or records sought to be
withheld are not reasonably related to a competitive matter.
SECTION 47. Amends Section 791.011(d), Government Code, to set forth the
requirement of an interlocal contract.
SECTION 48. Amends Subchapter A, Chapter 2256, Government Code, by adding
Section 2256.0201, as follows:
Sec. 2256.0201. AUTHORIZED INVESTMENTS; MUNICIPAL UTILITY. (a) Authorizes
a municipality that owns a municipal electric utility that is engaged in
the distribution and sale of electric energy or natural gas to the public
to enter into a hedging contract and related security and insurance
agreements in relation to fuel oil, natural gas, and electric energy to
protect against loss due to price fluctuations. Provides that a hedging
transaction must comply with the regulations of the Commodity Futures
Trading Commission and the Securities and Exchange Commission. Provides
that if there is a conflict between the municipal charter of the
municipality and this chapter, this chapter prevails.
(b) Provides that payment by a municipally owned electric or gas utility
under a hedging contract or related agreement in relation to fuel supplies
or fuel reserves is a fuel expense. Authorizes the utility to credit any
amounts it receives under the contract or agreement against fuel expenses.
(c) Authorizes the governing body of a municipally owned electric or gas
utility or the body vested with power to manage and operate the municipally
owned electric or gas utility to set policy regarding hedging transactions.
(d) Defines "hedging" as the buying and selling of fuel oil, natural gas,
and electric energy futures or options or similar contracts on those
commodity futures as a protection against loss due to price fluctuation,
for purposes of this section.
SECTION 49. Amends Sections 52.133 (a), (c), and (d), Natural Resources
Code, as follows:
(a) Deletes language excepting the Board for Lease of University Lands
from the requirement that each oil or gas lease covering land leased by the
school land board (board), by a board for lease, or by the surface owner of
land under which the state owns the minerals under the Relinquishment Act
land, must include a provision granting the board or the owner of the land
and the Commissioner of the General Land Office (commissioner) authority to
take their royalty in kind.
(c) Authorizes the commissioner, the owner of the soil under Subchapter F,
or the commissioner acting on the behalf of and at the direction of an
owner of the soil under Subchapter F, the board, or a board for lease, or
at the direction of the Board for Lease of University Lands, to negotiate
and execute contracts or any other instruments or agreements necessary to
enhance their portion of the royalty taken in kind, including contracts for
purchase. Makes nonsubstantive changes.
(d) Authorizes the commissioner, the owner of the soil under Subchapter
F, or the commissioner acting on behalf of and at the direction of an owner
of the soil under Subchapter F, the 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 language providing that
this section does not apply to or have any effect on the Board for Lease of
University Lands or any lease executed on university land.
SECTION 50. Amends Section 53.026, Natural Resources Code, is amended, as
follows:
Sec. 53.026. IN KIND ROYALTY. 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 enhance their portion of the royalty taken in
kind, including contracts for purchase, and convert that portion of the
royalty taken in kind to other forms of energy, including electricity.
Redesignates existing Subsection (b) to Subsection (c). Makes conforming
and nonsubstantive changes
SECTION 51. Amends Section 53.077, Natural Resources Code, is amended, as
follows:
Sec. 53.077. IN KIND ROYALTY. 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 enhance their portion of the royalty taken in kind and convert
that portion of the royalty taken in kind to other forms of energy,
including electricity. Redesignates existing Subsection (b) to Subsection
(c). Makes a conforming change.
SECTION 52. Amends Article 717p, V.T.C.S., Chapter 245, Acts of the 67th
Legislature, Regular Session, 1981, by adding Section 4C, as follows:
Sec. 4C. (a) Provides that this section applies only to a river authority
that is engaged in the distribution and sale of electric energy to the
public.
(b) Authorizes a river authority, notwithstanding any other law, to
provide transmission services, as defined by the Utilities Code or PUC, on
a regional basis to any eligible transmission customer at any location
within or outside the boundaries of the river authority and to acquire,
including by lease-purchase, lease from or to any person, finance,
construct, rebuild, operate, or sell electric transmission facilities at
any location within or outside the boundaries of the river authority.
Provides that this section does not allow a river authority to construct
transmission facilities to an ultimate consumer of electricity to enable an
ultimate consumer to bypass the transmission or distribution facilities of
its existing provider or relieve a river authority from an obligation to
comply with the provisions of the Utilities Code concerning a certificate
of convenience and necessity for a transmission facility.
SECTION 53. Amends Sections 1 and 2, Article 1115a, V.T.C.S., as follows:
Sec. 1. Provides that this article applies only to a home-rule
municipality that owns an electric utility system, that by ordinance or
charter elects to have the management and control of the system governed by
a board of trustees, rather than by this article, and that:
(1) has outstanding obligations payable in whole or part, rather than
solely, from and secured by a lien on and pledge of net revenues of the
system; or
(2) issues obligations that are payable in whole or part, rather than
solely, from and secured by a lien on and pledge of the net revenues of
the system and that are approved by the attorney general.
Sec. 2. Authorizes a municipality by ordinance to transfer management and
control of the electric utility system to a board, rather than a
five-member board, of trustees appointed by the municipality's governing
body. Requires the municipality by ordinance to determine the
qualifications for appointment and the number of members. Authorizes the
municipality by ordinance to vest the power to establish rates and related
terms and conditions for its municipally owned electric utility in the
board of trustees appointed under this section. Makes a nonsubstantive
change.
SECTION 54. Amends Section 151.0101(a), Tax Code, to redefine "taxable
services."
SECTION 55. Amends Section 182.021(l), Tax Code, to redefine "utility
company."
SECTION 56. Amends Section 182.025, Tax Code, effective January 1, 2002,
to prohibit the total charges relating to distribution service of an
electric utility or transmission and distribution utility within the city
from exceeding the amount or amounts prescribed by Section 33.008,
Utilities Code. Authorizes these charges to be only for distribution
service. Defines "distribution service," "electric utility," "public
utility," and "transmission and distribution utility."
SECTION 57. Amends Subchapter B, Chapter 182, Tax Code, by adding Section
182.027, as follows:
Sec. 182.027. NO EXEMPTION. Provides that, notwithstanding anything to the
contrary in Chapter 161, Utilities Code, this subchapter applies to a
retail electric provider as defined in Section 31.002(17), Utilities Code,
that is owned, operated, or controlled by an electric cooperative.
SECTION 58. Amends Subchapter E, Chapter 191, Tax Code, by adding Section
191.0825, as follows:
Sec. 191.0825. REFUND OR CREDIT. (a) Entitles a person subject to the tax
imposed by Subchapter E to a refund if the person performs taxable services
on a gas well that was drilled after January 1, 2000, and the well produced
gas that was primarily used as a fuel to generate electricity.
(b) Authorizes the comptroller of public accounts to provide for a person
subject to the tax to claim a credit against the tax instead of claiming a
refund.
SECTION 59. Amends Subchapter B, Chapter 201, Tax Code, by adding Section
201.059, as follows:
Sec. 201.059. REFUND OR CREDIT OF TAX. (a) Exempts natural gas produced
from a well drilled after January 1, 2000, from the taxes imposed by
Chapter 201 if the gas produced from the well is primarily used as a fuel
to generate electricity.
(b) Provides that the tax must be paid when due at the rate provide by
Section 201.052 for all gas exempt under this section. Authorizes the
person responsible for paying the tax to apply to the comptroller for a
refund of the gas that is eligible for the exemption and is entitled to the
refund.
(c) Authorizes the comptroller to provide for a person responsible for
paying the tax to claim a credit against the tax instead of claiming a
refund.
SECTION 60. Amends Article 601d, V.T.C.S. (Texas Public Finance Authority
Act), by adding Section 9E, as follows:
Sec. 9E. FINANCING OF STRANDED COSTS. (a) Requires the authority to have
the power to issue bonds, notes, certificates of participation, or other
obligations or evidences of indebtedness to finance stranded costs of a
municipal power agency created by concurrent resolution by its member
cities on or before August 1, 1975, pursuant to Chapter 163, Utilities
Code, or that chapter's predecessor. Provides that the stranded costs are
set forth as allocated to member cities in the "Potentially Strandable
Investment (ECOM) Report: 1998 Update" issued by the Public Utility
Commission.
(b) Requires the authority, at the request of any member city of a
municipal power agency, to issue indebtedness in the amount of the
requesting member city's stranded costs, plus other described costs along
with issuance costs and to make a grant of the proceeds of such
indebtedness to the municipal power agency, subject to certain enumerated
conditions.
(c) Requires the indebtedness to be secured by nonbypassable charges
imposed by the authority upon retail customers receiving transmission and
distribution services provided by the requesting member city. Prohibits
the indebtedness from the debts of the state, the municipal power agency,
or any member of the municipal power agency.
(d) Requires the Public Utility Commission to provide assistance to the
authority that is necessary to ensure the collection and enforcement of the
nonbypassable charges.
(e) Grants to the authority and the Public Utility Commission all powers
necessary to effectuate the duties and responsibilities set forth in this
section. Requires the broad interpretation of this section in a manner
consistent with the most cost-effective financing of stranded costs.
Requires the indebtedness to be structure to exclude the interest from
gross income for federal income tax purposes, to the extent possible.
Prohibits the interest from being subject to tax or included as part of the
measurement of tax by the state or any of its political subdivisions.
SECTION 61. Amends Section 11(a), Article 601d, V.T.C.S. (Texas Public
Finance Authority Act), to include the financing of stranded costs of a
municipal power agency among the acts to which the board's authority under
the Texas Public Finance Authority Act are limited.
SECTION 62. Repealer: Section 12.104, Utilities Code (Duties of General
Counsel); Chapter 34, Utilities Code (Electrical Planning); Subchapters F
(Partial Rate Deregulation Available to Certain Cooperatives) and G ( Rate
Changes by Certain Electric Cooperatives), Chapter 36, Utilities Code; and
Section 37.058, Utilities Code (Certificate for Electric Generating Plant).
SECTION 63. (a) Provides that this Act does not restrict or limit a
municipality's historical right to control and receive reasonable
compensation for use of public streets, alleys, rights-of-way, or other
public property to convey or provide electricity.
(b) Provides that this Act does not affect a retail electric utility's
right to provide electric service in accordance with its certificate of
public convenience and necessity. Authorizes the revocation or
modification of a certificate of convenience and necessity, provided by
Section 37.059, Utilities Code (Revocation or Amendment of Certificate),
and Section 37.060, Utilities Code, as added by this Act.
SECTION 64. Requires any person or entity that provides electric service
to the institution of higher education on December 31, 2001, to continue to
offer electric service to an institution of higher education until
September 1, 2007, at a total rate that is no higher than the rate paid by
the institution on December 31, 2001. Requires the December 31, 2001 rate
to be based on the rates provided for or described in Section 36.351,
Utilities Code. Defines "person or entity."
SECTION 65. Requires PUC to study and make recommendations by December 15,
2000, to the 77th Legislature for additional legislation that would move to
and establish a competitive electric market, in accordance with the changes
in law made by this Act.
SECTION 66. Requires PUC, no later than 180 days after the effective date
of this Act, to establish rules and procedures for the securitization of
stranded costs for river authorities, as provided by Subdivision (2),
Subsection (a), Section 40.003, Utilities Code, and for electric
cooperatives under Section 41.003, Utilities Code, as added by this Act.
SECTION 67. Effective date: September 1, 1999.
SECTION 68. Emergency clause.
COMPARISON OF ORIGINAL TO SUBSTITUTE
The substitute modifies the original bill by changing the caption from
"relating to electric utility restructuring and to the powers and duties of
the Public Utility Commission of Texas; providing civil and administrative
penalties; making an appropriation" to "relating to electric utility
restructuring and to the powers and duties of the Public Utility Commission
of Texas, Office of Public Utility Counsel, and Texas Natural Resource
Conservation Commission; providing penalties."
The substitute modifies the original bill in SECTION 1 (Section 11.003,
Utilities Code) to redefine "electric cooperative" to include a successor
to an electric cooperative created before June 1, 1999, in accordance with
a conversion plan approved by a vote of the members of the electric
cooperative, regardless of whether the successor later purchases, acquires,
merges with, or consolidates with other electric cooperatives.
The substitute modifies the original bill by adding a new SECTION 6. For a
complete analysis of SECTION 6, please see the Section-by-Section Analysis
portion of this document.
The substitute modifies the original bill by redesignating SECTIONS 6-13 of
the original bill as SECTIONS 7-14, respectively.
The substitute modifies the original bill in redesignated SECTION 8
(Section 13.043, Utilities Code) by providing that "person" includes an
electric cooperative, for purposes of this section.
The substitute modifies the original bill in redesignated SECTION 11
(Section 31.002, Utilities Code), as follows:
(18) Redefines "separately metered" as metered by an individual meter that
is used to measure electric energy consumption by a retail customer and for
which the customer is directly billed by a utility, retail electric
provider, electric cooperative, or municipally owned utility, rather than
only a utility or retail electric provider.
(19) Makes nonsubstantive change.
(20) Provides an exception for the definition of "transmission service."
The exception provides that, on and after the implementation of customer
choice, control area services, scheduling resources, regulation services,
provision of operating reserves, and reactive power, voltage control, and
other services provided by generation resources are not "transmission
service."
The substitute modifies the original bill by adding a new SECTION 15. For
a complete analysis of SECTION 15, please see the Section-by-Section
Analysis portion of this document.
The substitute modifies the original bill by redesignating SECTIONS 14-19
of the original bill as SECTIONS 16-21, respectively.
The substitute modifies the original bill in redesignated SECTION 17
(Section 35.004, Utilities Code) by authorizing PUC to approve wholesale
rates, rather than rates, that may be periodically adjusted to ensure
timely recovery of transmission investment, notwithstanding Section 36.201.
The substitute also modifies the original bill in SECTION 17 by requiring
acquisition of generation-related ancillary services on a nondiscriminatory
basis by the independent organization in ERCOT on behalf of the entities
selling electricity at retail, on the introduction of customer choice in
the ERCOT power region, to be deemed to meet the requirements of this
subsection.
The substitute modifies the original bill by adding a new SECTION 22. For
a complete analysis of SECTION 22, please see the Section-by-Section
Analysis portion of this document.
The substitute modifies the original bill by redesignating SECTIONS 20-28
of the original bill as SECTIONS 23-31, respectively.
The substitute modifies the original bill in redesignated SECTION 23
(Chapter 35, Utilities Code), as follows:
Sec. 35.103. Provides that a utility service to be provided to the state
at the lowest applicable rate must include any applicable stranded costs or
system benefit fees. The original bill did not specify the inclusion of
applicable stranded costs or system benefit fees.
Sec. 35.104. Provides that Sections 35.102 and 35.103, rather than
Sections 35.102, 35.103, and 35.105, do not apply to the rates retail
service area, facilities, or public retail customers of a municipally owned
electric utility or electric cooperative that has not adopted customer
choice.
Section 35.105. Deletes proposed Section 35.105 pertaining to costs of
serving state agencies. Redesignates proposed Section 35.106 to Section
35.105.
The substitute modifies the original bill in redesignated SECTION 30
(Section 37.001, Utilities Code) by including electric cooperative in the
definition of "retail electric utility." The substitute also modifies the
original bill in SECTION 30 by extending the definition of "retail electric
utility" to provide that the owner or operator of a qualifying cogeneration
facility who was issued the necessary environmental permits from the Texas
Natural Resource Conservation Commission after January 1, 1998, and who
commenced construction of qualifying facility before July 1, 1998, is
authorized to provide electricity to the purchasers of the thermal output
of that qualifying facility, and is prohibited for that reason from being
considered an electric utility or a retail electric utility under the
specified provisions.
The substitute modifies the original bill by adding a new SECTION 32. For
a complete analysis of SECTION 32, please see the Section-by-Section
Analysis portion of this document.
The substitute modifies the original bill by redesignating SECTIONS 29-33
of the original bill as SECTIONS 33-37, respectively.
The substitute modifies the original bill in redesignated SECTION 33
(Subchapter B, Chapter 37, Utilities Code), as follows:
Sec. 37.060. (a) Provides, rather than requires, that this subsection
and Subsections (b)(g) apply only to the specified areas. Makes reference
to a resolution adopting customer choice that is effective on January 1,
2002, rather than effective upon certification of the applicable power
region. Makes conforming and nonsubstantive changes.
(b) Provides that this section does not apply, rather than requires this
section to not apply, in the specified areas.
(c)-(f) Makes no change.
(g) Prohibits this provision from being construed to limit the PUC's
authority to grant exceptions or to amend a retail electric utility's
certificate, upon request and notification, for areas to which retail
service is being provided pursuant to written consent granted after June 1,
1999. Makes nonsubstantive changes.
The substitute modifies the original in SECTION 34 (Section 37.101,
Utilities Code) by conforming Subsection (a) so the language in the
subsection refers to electric cooperatives as well as electric utilities
wherever the latter term is mentioned.
The substitute modifies the original bill in redesignated SECTION 37
(Subchapter A, Chapter 38, Utilities Code), as follow:
Sec. 38.005. Removes the provision stating that the reliability standards
to be developed by rule are not limited to the ones listed. Establishes
the system-average interruption frequency index as SAIFI and the
system-average interruption duration index SAIDI. Requires PUC to take
appropriate enforcement action, including but not limited to action against
a utility if any feeder with 10 or more customers appears on the utility's
list of worst 10 percent performing feeders for any two consecutive years
or has a SAIDI or SAIFI average that is more than 300 percent greater than
the system average of all feeders during any two-year period, beginning the
year 2000. Makes appropriate redesignations to subsections. Makes
conforming changes.
The substitute modifies the original bill by adding a new SECTION 38. For
more information regarding SECTION 38, please see the Section-by-Section
Analysis portion of this document.
The substitute modifies the original bill by redesignating SECTIONS 34 and
35 of the original bill as SECTIONS 39 and 40, respectively.
The substitute modifies the original bill in redesignated SECTION 40
(Subtitle B, Title 2, Utilities Code), as follows:
CHAPTER 39. RESTRUCTURING OF ELECTRIC UTILITY INDUSTRY
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 39.001. LEGISLATIVE POLICY AND PURPOSE. (a) Makes a nonsubstantive
change.
(b) Makes no change.
(c) Excludes the governing body of a municipally owned electric utility
that has not opted for customer choice or the body vested with power to
manage and operate a municipally owned electric utility that has not opted
for customer choice from being classified as regulatory authorities.
(d) New subsection. Requires regulatory authorities, excluding the
governing body of a municipally owned electric utility that has not opted
for customer choice or the body vested with power to manage and operate a
municipally owned electric utility that has not opted for customer choice,
to authorize or order competitive rather than regulatory methods to achieve
the goals of this chapter to the greatest extent feasible and to adopt
rules and issue orders that are both practical and limited so as to impose
the least impact on competition.
(e) New subsection. Requires that judicial review of competition rules
adopted by the PUC be conducted under Chapter 2001, Government Code, except
as otherwise provided by this chapter. Requires that judicial review of
the validity of competition rules to be commenced in the court of appeals
for the Third Court of Appeals District and to be limited to the PUC's
rulemaking record, which consists of certain enumerated items. For more
information regarding this new subsection, please see the Section-bySection
Analysis portion of this document.
(f) New subsection. Provides that a person who challenges the validity of
a competition rule must file a notice of appeal with the court of appeals
and serve the notice on the PUC not later than the 15th day after the date
on which the rule as adopted is published in the Texas Register. Requires
the notice of appeal to designate the person challenging the rule as the
appellant and the PUC as the appellee. Requires PUC to prepare the
rulemaking record and file it with the court of appeals withing 30 days of
the date the notice of appeal is served on PUC. Requires the court of
appeals to hear and determine each appeal as expeditiously as possible with
lawful precedence over other matters. Requires the appellant and any person
permitted to intervene in support of the appellant's claims to file and
serve briefs not later than the 30th day after the date PUC files the
rulemaking record. Requires PUC and any person permitted to intervene in
support of the rule to file and serve briefs within 60 days after the date
the appellant files the appellant's brief. Authorizes the court of
appeals, on its own motion or on motion of any person for good cause, to
modify the filing deadlines prescribed by this subsection. Requires the
court of appeals to render judgment affirming the rule or reversing and, if
appropriate on reversal, remanding the rule to PUC for further proceedings,
consistent with the court's opinion and judgment. Provides that the Texas
Rules of Appellate Procedure apply to an appeal brought under this section
to the extent not inconsistent with this section.
Sec. 39.002. APPLICABILITY. Makes conforming changes.
Sec. 39.003. CONTESTED CASES. Deletes proposed text and replaces with new
text. Requires that, unless specifically provided otherwise, each PUC
proceeding under this chapter other than a rulemaking proceeding, report,
notification, or registration, to be conducted as a contested case and the
burden of proof is on the incumbent electric utility.
SUBCHAPTER B. TRANSITION TO COMPETITIVE RETAIL
ELECTRIC MARKET
Sec. 39.051. UNBUNDLING. Requires each electric utility, on or before
September 1, 2000, to separate from its regulated utility activities its
customer energy services business activities that are otherwise also
already widely available in the competitive market. The original bill
required each electric utility to unbundle its costs and rates into
generation, transmission, distribution, and retail energy services and a
system benefit fund charge and expected competition transition charge, on
or before September 1, 2000. Authorizes an electric utility to create
separate transmission and distribution utilities. Requires each electric
utility to unbundle in a manner consistent with Section 39.157(d).
Requires each electric utility to file with the PUC a plan to implement
this section by January 10, 2000. The original bill required this filing to
be made by January 1, 2000. Deletes 120 day time requirement for the PUC
to adopt, adopt with changes, or reject, a utility's plan for business
separation. Deletes proposed Subsection (g) pertaining to a power region
not qualifying for customer choice. Makes conforming changes.
Sec. 39.052. FREEZE ON EXISTING BASE RATE TARIFFS. Makes no change.
Sec. 39.053. COST RECOVERY ADJUSTMENTS. Makes no change.
Sec. 39.054. RETAIL ELECTRIC SERVICE DURING THE FREEZE PERIOD. Prohibits
this title from being construed to restrict an electric utility,
voluntarily and at its sole discretion, from offering new services or new
tariff options to its customers during the freeze period, consistent with
Section 39.051(a).
Sec. 39.055. FORCE MAJEURE. Makes no change.
SUBCHAPTER C. RETAIL COMPETITION
Sec. 39.101. CUSTOMER SAFEGUARDS. (a) Entitles a retail customer to
information in English and Spanish and any other languages as necessary
concerning rates, key terms, and conditions, in a standard format that will
permit comparisons between price and service offering, and the
environmental impact of certain production facilities.
(b)-(d) Makes no change.
(e) Authorizes PUC to adopt and enforce rules as necessary or appropriate
to carry out Subsections (a)-(d), including rules for minimum service
standards for a retail electric provider relating to interconnection and
use of on-site generation.
(g) New subsection. Requires compliance with Subsections (a)-(e) by a
provider of electric service which is a municipally owned utility to be
administered solely by the governing body of the municipally owned utility,
which is required to adopt, implement, and enforce rules having the effect
of accomplishing the objectives of Subsections (a)-(e). Requires reports
containing the information required by Subsection (d) to be filed by the
municipally owned utility with the governing body.
Sec. 39.102. RETAIL CUSTOMER CHOICE. (a) Deletes exception of retail
customers in power regions that are not certified as qualifying for
competition by the commission.
(c) Provides that a systemwide freeze for residential and commercial
customers is in effect September 1, 1997, and extending beyond December 31,
2001.
Sec. 39.1025. LIMITATIONS ON TELEPHONE SOLICITATION. New section.
Prohibits a person from making or causing to be made a telephone
solicitation to an electricity customer who has given notice to PUC of the
customer's objection to receiving telephone solicitations relating to the
customer's choice of retail electric providers. Requires PUC to establish
and provide for the operation of a database to compile a list of customers
who object to receiving telephone solicitation. Authorizes PUC to operate
the database or contract with another entity to operate the database. For
more information regarding this new section, please see the
Section-by-Section Analysis portion of this document.
Sec. 39.103. COMMISSION AUTHORITY TO DELAY COMPETITION AND SET NEW RATES.
Deletes reference to requirements of Section 39.152.
Sec. 39.104. CUSTOMER CHOICE PILOT PROJECTS. (a) Prohibits an electric
utility in a multiply certificated area from including customers that were
served by an electric cooperative or a municipally owned utility on May 1,
1999.
(b) Deletes reference to ERCOT.
(c) Deletes text of original subsection and replaces with new text.
Requires distribution of the load designated for customer choice under this
section to all customer classes of a utility consistent with the purpose of
this section and subject to PUC approval.
(j) New subsection. Requires 20 percent of the load designated for
customer choice under this section to be initially set aside for aggregated
loads.
Makes appropriate redesignations of subsections.
Sec. 39.105. LIMITATION ON SALE OF ELECTRICITY. Deletes reference to
areas which consumer choice has been introduced.
Sec. 39.106. PROVIDER OF LAST RESORT. Requires PUC, no later than June 1,
2001, to designate the provider or providers of last resort. Deletes
reference to certain areas of the state.
Sec. 39.107. METERING AND BILLING SERVICES. (a) Requires that metering
services provided to commercial and industrial customers be provided on a
competitive basis beginning on January 1, 2004. Deletes references to
areas in which customer choice is introduced.
(b) Deletes proposed text and replaces with new text. Requires metering
and billing services provided to residential customers to continue to be
provided by the transmission and distribution utility affiliate of the
electric utility that was serving the area before the introduction of
customer choice until the later of September 1, 2005, or the date on which
at least 40 percent of those residential customers are taking service from
unaffiliated retail electric providers. Requires metering and billing
services provided to residential customers to be governed by the customer
safeguards adopted by PUC under Section 39.101.
(c) New subsection. Requires tenants of leased or rented property that is
separately metered, beginning on the date of introduction of customer
choice in a service area, to have the right to choose a retail electric
provider, an electric cooperative offering customer choice, or a
municipally owned utility offering customer choice, and requires the owner
of the property to grant reasonable and nondiscriminatory access to
transmission and distribution utilities, retail electric providers,
electric cooperative, and municipally owned utilities for metering
proposes.
(d) Makes a conforming change.
(e) Authorizes a transmission and distribution utility to bill retail
customers at the request of the electric cooperative or municipally owned
utility, if an electric cooperative or municipally owned utility is
providing the customer's energy requirements. Makes a conforming change.
(f) Requires charges for metering and billing services to comply with
rules adopted by PUC relating to nondiscriminatory rates of service,
beginning on the date of introduction of customer choice in a service area.
(g) New subsection. Prohibits metered electric service sold to
residential customers on a prepaid basis from being sold at a price that is
higher than the price charged by the provider of last resort.
Makes appropriate redesignations of subsections.
Sec. 39.108. CONTRACTUAL OBLIGATIONS. Makes no change.
Sec. 39.109. NEW OWNER OR SUCCESSOR. New section. Requires PUC to
require a generating facility that is transferred to a new owner or
successor in interest between June 1, 1999, and January 1, 2002, to
continue to be operated and maintained by the same operating personnel for
not less than two years, except the personnel may be dismissed for cause.
Requires this section to apply only if the facility is actually operated
during the two-year period after the sale. Prohibits this section from
requiring that the purchaser cause the facility to be operated in whole or
in part, nor shall it preclude a temporary closure of the facility during
the two-year period. Prohibits this section from creating any obligation
extending after the two-year period following the sale.
SUBCHAPTER D. MARKET STRUCTURE
Sec. 39.151. ESSENTIAL ORGANIZATIONS. (a) Deletes reference to obtaining
commission certification as a qualifying power region.
(b)-(f) Make a nonsubstantive change.
(g) Provides that if it amends its governance rules to provide that its
governing body is composed as prescribed by this subsection, rather than to
allow representation reflecting the makeup of the retail market on its
governing board in accordance with Subsection (b), the existing independent
system operator in ERCOT will meet the criteria provided by Subsection (a)
with respect to ensuring access to the transmission systems for all buyers
and sellers of electricity in the ERCOT region and ensuring the reliability
of the regional electrical network. Provides that to comply with this
subsection, the governing body must be composed of certain members.
Deletes text relating to how the ERCOT independent system operator may meet
certain criteria.
(h) Includes text formerly in Subsection (g) regarding how the ERCOT
independent system operator may meet criteria in Subsection (a).
(i) Redesignated from Subsection (h) of the original.
(j) The substitute redesignates Subsection (i) of the original to
Subsection (j), and also requires observance of all planning and
reliability policies, rules, guidelines, and procedures established by the
independent system operator in ERCOT.
(k) Redesignated from Subsection (j) of the original. Makes a conforming
change.
(l) Redesignated from Subsection (k) of the original.
(m) New subsection. Requires a power region outside of ERCOT to be deemed
to have met the requirement to establish an independent organization to
perform the transmission functions specified in Subsection (a) if the
Federal Energy Regulatory Commission has approved a regional transmission
organization for the region and found that the regional transmission
organization meets the requirements of Subsection (a).
Sec. 39.152. QUALIFYING POWER REGIONS. (a) Deletes reference to a power
region "qualifying" for customer choice when it satisfies the subsection.
(b) Makes no change.
(c) New subsection. Requires the requirements of Subsection (a)(2) for a
power region outside of ERCOT to be deemed to have been met if power
aggregating to approximately 50,000 megawatts can be delivered to the
portion of the power region that is in this state through the payment of
not more than one transmission tariff.
(d) New subsection. Authorizes a power generation company that is
affiliated with an electric utility, for a power region outside of ERCOT,
to elect to demonstrate that it meets the requirements of Subsection (a)(3)
by showing that it does not own and control more than 20 percent of the
installed capacity in a geographic market that includes the power region,
using the guidelines, standard, and methods adopted by the Federal Energy
Regulatory Commission.
(e) New subsection. Provides that in a power region outside of ERCOT, if
customer choice is introduced before fulfillment of Subsection (a)
requirements, an affiliated retail electric provider is prohibited from
competing for retail customers in any area of the power region that is
within this state and outside of the affiliated transmission and
distribution utility's certificated service area unless the affiliated
power generation company makes a commitment to maintain and does maintain
rates that are based on cost of service for any electric cooperative or
municipality that was a wholesale customer on January 1, 1999, and was
purchasing power at rates that were based on cost of service. Requires a
power generating company to sell power at rates that are based on cost of
service, notwithstanding the expiration of a contract for that service,
until the requirements of Subsection (a) are met.
(f) New subsection. Provides that if PUC determines that the available
transmission facilities limit the delivery of electricity from generators
located outside this state to areas of the power region within this state
and that the requirements of Subsection (a) have not been met for that
region, any utility-affiliated power generation company in the power region
is required to maintain adequate supply and facilities to provide electric
service to persons who were or would have been retail customers of the
affiliated retail electric provider on December 31, 2001. Provides that
the obligation provided by this subsection remains in effect until PUC
determines that the available transmission facilities do not limit the
delivery of electricity from generators located outside this state to the
power region or that the requirements of Subsection (a) have been met for
the region.
Sec. 39.153. CAPACITY AUCTION. (a) Limits the capacity auction
requirement to "Texas jurisdictional" installed generating capacity.
(b)-(g) Makes nonsubstantive changes.
Sec. 39.154. LIMITATION OF OWNERSHIP OF INSTALLED CAPACITY. (a)-(c) Makes
nonsubstantive changes.
(d) Provides that "installed generation capacity" includes the capacity of
generating facilities that will be connected with a transmission or
distribution system and operating within 12 months, rather than generating
facilities for which Texas Natural Resource Conservation Commission has
issued a permit and which are anticipated to be in operation within two
years.
(e) New subsection. Requires PUC, in determining the percentage shares of
installed generation capacity owned and controlled by a power generation
company for purposes of calculating the numerator, to reduce the installed
generation capacity owned and controlled by that power generation company
by the installed generation capacity of any "grandfathered facility" within
an ozone nonattainment area as of September 1, 1999, for which that power
generation company has commenced complying or made a binding commitment to
comply with Section 39.264.
Sec. 39.155. COMMISSION ASSESSMENT OF MARKET POWER. (a)-(c) Makes
nonsubstantive changes.
(d) Deletes reference to "after the introduction of customer choice" with
respect to reporting obligation.
Sec. 39.156. MARKET POWER MITIGATION PLAN. (b) Changes the date of
submittal of a market power mitigation plan from December 31, 2000, to
December 1, 2000.
(c) Authorizes the plan to provide for the sale of the right to capacity to
a nonaffiliated person for at least four years. Makes appropriate
redesignations of subdivisions.
(d)-(j) Makes nonsubstantive changes.
Sec. 39.157. COMMISSION AUTHORITY TO ADDRESS MARKET POWER. (a) Deletes
reference to notice and opportunity for hearing. Requires PUC to require
reasonable mitigation of the market power by seeking an injunction or civil
penalties as necessary to eliminate or to remedy the market power abuse or
violation as authorized by Chapter 15, by imposing an administrative
penalty as authorized by Chapter 15, or by suspending, revoking, or
amending a certificate or registration as authorized by Section 39.356,
rather than by other methods provided by the original bill, which included
requiring a reduction of generation capacity through the auction of
generation capacity entitlements, instituting price cap regulation, setting
appropriate restrictions on the sale of electricity, establishing
limitations on the use of generation, transmission, or distribution
facilities, or any other reasonable remedy. Provides that for purposes of
this subchapter, market power abuses are practices by persons possessing
market power that are unreasonably discriminatory or tend to unreasonably
restrict, impair, or reduce the level of competition. Defines "market
power" for purposes of this section. Requires a violation of the code of
conduct provided by Subsection (d) that materially impairs the ability of a
person to compete in a competitive market to be deemed to be an abuse of
market power. Provides that the possession of a high market share in a
market open to competition may not, of itself, be deemed to be an abuse of
market power and further provides that this sentence shall not affect the
application of state and federal antitrust laws.
(b) Makes no change.
(c) Makes a conforming change to delete the requirement for notice and
hearing.
(d) Deletes proposed text and replaces with new text. Requires PUC, not
later than January 10, 2000, to adopt rules and enforcement procedures to
govern transactions or activities between a transmission and distribution
utility and its competitive affiliates to avoid potential market power
abuses and cross-subsidizations between regulated and competitive
activities both during the transition to and after the introduction of
competition. Provides that nothing in this subsection is intended to
affect or modify the obligations or duties relating to any rules or
standards of conduct that may apply to a utility or the utility's
affiliates under orders or regulations of the Federal Energy Regulatory
Commission or the Securities and Exchange Commission. Authorizes a
utility that is subject to statutes or regulations in other states that
conflict with a provision of this section to petition PUC for a waiver of
the conflicting provision on a showing of good cause. Requires the rules
under this section to ensure certain enumerated points. For more
information regarding these points, please see the Section-by-Section
Analysis portion of this document.
(e) Requires the rules adopted by PUC to be consistent with Chapters 40
and 41, and prohibits the rules from being more restrictive than the rules
adopted under Subsection (d).
(f) Deletes proposed text. Redesignated from Subsection (g). Makes a
conforming change to clarify that PUC authority under this subsection
begins on the date of introduction of customer choice.
(g) New subsection. Prohibits the sharing of corporate support services
in accordance with this section from allowing or providing a means for the
transfer of confidential information from a utility to an affiliate, create
the opportunity for preferential treatment or an unfair competitive
advantage, lead to customer confusion, or create significant opportunities
for cross-subsidization of affiliates.
(h) New subsection. Prohibits a utility or competitive affiliate from
circumventing the provisions of Subsection (d) by using any utility
affiliate to provide information, service, or subsidies between the utility
and a competitive affiliate.
(i) New subsection. Defines "competitive affiliate" and "corporate
support services," and provides examples of services that may be shared and
services that may not be shared.
Sec. 39.158. MERGERS AND CONSOLIDATIONS. Requires an owner of electric
generation facilities that offers electricity for sale in the state and
proposes to merge, consolidate, or otherwise become affiliated with another
owner of electric generation facilities that offers electricity for sale in
this state to obtain PUC approval prior to closing if the electricity
offered for sale in the power region by the merged consolidated, or
affiliated entity will exceed one percent of the total electricity for sale
in the power region.
In proposed Section 39.201(d), the substitute differs from the original by
removing October 1, 2000, as the date on or before which PUC is required to
hold a hearing on proposed tariffs. The substitute also adds language that
the expected competition charge is determined under proposed Subsections
(g) and (h) and as implemented under proposed Subsections (i)-(l), if any.
In proposed Section 39.201(h), the substitute differs from the original by
requiring the electric utility to use the ECOM administrative model
referenced in Section 39.262, rather than Section 39.262(h), to determine
estimated stranded costs. The substitute also provides that natural gas
prices used in the model must be market-based natural gas forward prices,
and requires growth rates in generating plant operations and maintenance
costs and allocated administrative and general costs to be benchmarked by
comparing those costs to the best available information on cost trends for
comparable generating plants. Under the original, the ECOM model needed to
include updated natural gas price forecasts as determined by the
commission. In addition, the substitute requires capital additions to be
benchmarked using the limitation in proposed Section 39.259(b).
In proposed Section 39.201(j), the substitute differs from the original by
specifying that any competition transition charge must be adjusted for
normal weather conditions.
In proposed Section 39.201(k), the substitute differs from the original by
requiring PUC to consider the sum of the transmission and distribution
charges and the system benefit fund fees, rather than the sum of the
transmission distribution, and system benefit fund charges, to determine
the length of time over which costs under proposed Section 39.201(h) may be
recovered.
In proposed Section 39.201(l), the substitute differs from the original by
removing the limitation that customer choice must be introduced in the
electric utility's power region. Under the substitute, the stranded cost
estimate is to be reviewed two years after customer choice is introduced,
without mention of the introduction of customer choice in the electric
utility's power region.
The substitute differs from the original by removing proposed Section
39.201(m), which would have authorized PUC to adjust the filing and
implementation dates for utilities in a power region PUC had determined
would not qualify for customer choice.
In proposed Section 39.202(a), the substitute differs from the original by
requiring an affiliated retail electric provider, from January 1, 2002,
until January 1, 2007, rather than on and after January 1, 2002, and in
areas in which customer choice has been introduced, to charge specified
residential and small commercial customers of its affiliated transmission
and distribution utility specified adjusted rates that are six, rather than
five, percent less than those rates that were in effect on January 1, 1999.
The substitute also differs from the original by introducing an exception
to the requirement that these rates on a bundled basis be known as the
"price to beat" for residential and small commercial customers. That
exception is that the "price to beat" for a utility is the rate in effect
as a result of a settlement approved by PUC after January 1, 1999, if PUC
determines that base rates for that utility have been reduced by more than
12 percent as a result of a final order issued by PUC after October, 1998.
In proposed Section 39.202(b), the substitute differs from the original by
removing the provision that would have required PUC, for an area where
customer choice is to be introduced subsequent to January 1, 2002, to
determine the fuel factor for each electric utility in the area on the day
prior to the day customer choice is introduced. The substitute also
removes the description "for an area where customer choice is to be
introduced on January 1, 2002" as a limitation on the requirement that PUC
determine the fuel factor for each electric utility as of December 31,
2001.
In proposed Section 39.202(c), the substitute differs from the original by
making a nonsubstantive change.
In proposed Section 39.202(e) the substitute prohibits an affiliated retail
electric provider from charging rates for residential or small commercial
customers that are different from the price to beat until the earlier of 36
months after the date customer choice is introduced or as otherwise
specified. The original prohibited the affiliated retail electric provider
from charging rates that were different from the price to beat until the
earlier of 60 months after the date customer choice was introduced in the
power region or the date the commission determined that 40 percent or more
of the electric power consumed by residential and small commercial
customers within the affiliated transmission and distribution utility's
certificated service area before the onset of customer choice was committed
to be served by nonaffiliated retail electric providers.
The substitute differs from the original by redesignating proposed Section
39.202(f) of the original to Section 39.202(h) because of the introduction
of new Section 39.202(f). In new Section 39.202(f), the substitute
authorizes the affiliated retail electric provider, notwithstanding
proposed Section 39.202(e), to charge rates that are different from the
price to beat for service to aggregated loads of nonresidential customers
having an aggregated peak demand greater tan 1,000 kilowatts, provided that
all affected customers are commonly owned or franchisees of the same
franchisor.
The substitute differs from the original by redesignating proposed Section
39.202(g) of the original to Section 39.202(j) because of the introduction
of new Section 39.202(g). In new Section 39.202(g), the substitute
prohibits the affiliated retail electric provider from encouraging or
providing an incentive to a customer to switch to a nonaffiliated retail
electric provider, promoting any nonaffiliated retail electric provider, or
exchanging customers with any nonaffiliated retail electric provider to
comply with the requirements of proposed Section 39.202(e)(1) or (2).
In redesignated Section 39.202(h) (previously, Section 39.202(f) of the
original), the substitute differs from the original by introducing a new
standard to be used for measuring electric power consumption during the
period prior to the onset of customer choice. The substitute also
redesignates the provisions in proposed Section 39.202(f)(2) to Section
39.202(i) that if less than 12 months of consumption history exists for
any such customer, the usage history is required to be supplemented with
the prior history of that customer's location, and that, for service to a
new location, the annual consumption is required to be determined as the
transmission and distribution utility's estimate of the maximum annual
kilowatt demand used in sizing the electric service to that customer
multiplied by 8,760 hours, and that product multiplied by the average
annual customer load factor for small commercial customers with loads
greater than 20 kilowatts for the year 2000.
In redesignated Section 39.202(j) (previously, Section 39.202(g) of the
original), the substitute differs from the original by requiring an
electric utility or a transmission and distribution utility, upon
determining that its affiliated retail electric provider has met the
requirements of proposed Subsection (e)(1) or (2), to make a filing with
PUC attesting to the fact that those requirements have been met and that
the restrictions of Subsection (e)(1) or (2) and the true-up in Section
39.262(e), rather than this section, are no longer applicable. The
substitute also requires PUC to adopt appropriate procedures to enable it
to accept or reject the filing within 30 days, rather than requires the
commission to accept or reject the filing within 30 days. The substitute
makes conforming changes.
In redesignated Section 39.202(k) (previously, Section 39.202(h) of the
original), the substitute differs from the original by removing the
provision that PUC's adjustment to the price must be consistent with the
results of that proceeding.
The substitute differs from the original by redesignating proposed Section
39.202(i) of the original to Section 39.202(l).
The substitute differs from the original by adding Sections 39.202(m) and
(n). Section 39.202(m) provides that in a power region outside of ERCOT,
if customer choice is introduced before the requirement of Section
39.152(a) are met, an affiliated retail electric provider is required to
charge rates to customers other than residential and small commercial
customers that are no higher than the rates that, on a bundle basis, were
in effect on January 1, 1999, adjusted to reflect the fuel factor as
provided by Subsection (b) and adjusted for any base rate reduction as
stipulated to by an electric utility in a proceeding for which a final
order had not been issued by January 1, 1999. Section 39.202(n) provides
that notwithstanding Subsection (a), in a power region outside of ERCOT, if
customer choice is introduced before the requirements of Section 39.152(a)
are met, an affiliated retail electric provider is required to continue to
offer the price to beat to residential and small commercial customers,
unless the price is changed by PUC in accordance with this chapter, until
the later of 60 months after the date customer choice is introduced or the
requirements of Section 39.152(a) are met.
The substitute differs from the original by redesignating proposed Sections
39.202(j) and (k) of the original to Section 39.202(o) and (p).
In proposed Section 39.203(b), the substitute differs from the original by
adding a provision that prohibits a customer of a municipally owned utility
or an electric cooperative that has not opted for customer choice from
claiming the status of a wholesale customer or being designated as a
wholesale customer if the customer is being or has been served under a
retail rate schedule of the municipally owned utility or electric
cooperative.
In proposed Section 39.203(c), the substitute differs from the original by
making a nonsubstantive change.
In proposed Section 39.203(g), the substitute differs from the original by
making a nonsubstantive change.
In proposed Section 39.251(3), the substitute differs from the original by
amending the definition of "generation assets."
The substitute modifies the proposed definition of "regulatory assets"
found in Section 39.251(6) of the original, and relocates the definition to
Section 39.302 in the substitute. Accordingly, the substitute redesignates
proposed Sections 39.251(7) and (8) of the original to Sections 39.251(6)
and (7).
In redesignated Section 39.251(7), the substitute differs from the original
by redefining "stranded cost."
The substitute differs from the original by adding Section 39.252(d) to
require an electric utility to pursue commercially reasonable means to
reduce its potential stranded costs, and to require PUC to consider the
utility's efforts under this subsection when determining the amount of the
utility's stranded costs, provided, however, that nothing in this section
authorizes PUC to substitute its judgment for a market valuation of
generation assets determined under Sections 39.262(h) and (i).
In proposed Section 39.253, the substitute differs from the original by
requiring PUC, in allocating retail stranded costs among retail customer
classes, to determine a cost allocation methodology that incorporates the
enumerated factors; requiring retail stranded costs not directly related to
a generation plant to be allocated to retail customer classes based on the
kilowatt hour usage of each class; and providing that, except as provided
by proposed Section 39.262(k), no customer or customer class may avoid the
obligation to pay the amount of stranded costs allocated to that customer
or class. The original required retail stranded costs to be allocated
among retail customer classes, based on the relevant customer class
characteristics as of May 1, 1999, in accordance with the methodology used
to allocate the costs of the underlying assets in the electric utility's
most recent commission order addressing rate design, unless the utility had
agreed to an alternative allocation of stranded costs in a settlement
agreed to as part of a transition plan approved by the commission on or
after January 1, 1998, in which case the alternative allocation was
required to apply.
In proposed Section 39.256(a), the substitute differs from the original by
authorizing an electric utility described in Section 39.254, for the
calendar years of 1998, 1999, 2000, and 2001, rather than during the freeze
period, to redirect all or a part of the depreciation expense relating to
transmission and distribution assets to its net generation plant assets.
In proposed Section 39.258(1), the substitute differs from the original by
providing that the operation and maintenance expense to be used in the
annual report is to be the lesser of the utility's Texas jurisdictional
operation and maintenance expense reflected in the utility's 1996 Federal
Energy Regulatory Commission Form 1of the report year, plus factoring
expenses, adjusted for specified costs and revenues, or the utility's Texas
jurisdictional operation and maintenance expense reflected in the utility's
1996 Federal Energy Regulatory Commission Form 1of the report year, plus
factoring expenses, adjusted for specified costs and revenues and adjusted
for the annual percentage change in the average number of utility
customers.
In proposed Section 39.258(4), the substitute differs from the original by
including any other proceeding in which deferred costs and the amortization
of those costs are established, in addition to the utility's last rate
proceeding before the PUC, as proceedings in which the amortization
expenses that are presented can be used to determine the annual costs in
each annual report.
In proposed Section 39.260(a), the substitute differs from the original by
including proposed Subchapter G, in addition to Subchapter F, as
subchapters that define and identify invested capital and other terms that
affect the net book value of generation assets and the treatment of
specified transactions.
In proposed Section 39.261(c), the substitute differs from the original by
specifying that the annual report, which is required to be finalized and
resolved as to any disagreements, is to be done consistent with the
requirements of proposed Section 39.258.
In proposed Section 39.262(b), the substitute differs from the original by
making a nonsubstantive change.
In proposed Section 39.262(c), the substitute differs from the original by
requiring each transmission and distribution utility, its affiliated retail
electric provider, and its affiliated power generation company, after
January 10, 2004, rather than after January 1, 2004, or after two years
following the beginning of competition in a power regions, to jointly file
to finalize stranded costs and reconcile those costs with the estimated
stranded costs used to develop the competition transition charge in the
proceeding held under Section 39.201.
In proposed Section 39.262(e), the substitute differs from the original by
prohibiting the amount credited, if a reconciliation is required, from
exceeding an amount equal to the number of residential or small commercial
customers served by the affiliated transmission and distribution utility
that are buying electricity from the affiliated retail electric provider at
the price to beat on the second anniversary of the beginning of
competition, minus the number of new customers obtained outside the service
area, multiplied by $150, rather than prohibiting the amount credited from
exceeding 50 percent of the net income reported by the affiliated retail
electric provider in its annual report to the SEC. The substitute also
makes conforming and nonsubstantive changes.
The substitute differs from the original by redesignating Section 39.262(f)
of the original to Section 39.262(g). In new Section 39.262(f), the
substitute requires PUC, to the extent that any amount of regulatory assets
included in a securitization charge or competitive transition charge
exceeds the amount of regulatory assets approved in a rate order which
became effective on or before September 1, 1999, to conduct a review during
the true-up proceeding to determine whether such amounts were appropriately
calculated and constituted reasonable and necessary costs pursuant to
Subchapter B (Computation of Rates), Chapter 36. The substitute also
requires a credit or other rate adjustment, if PUC finds that the amount of
regulatory assets specified in Section 39.302(5) is subject to
modification, to be made to the transmission and distribution utility's
non-bypassable delivery rates; provided, however, that no adjustment is
authorized to be made to a transition charge established under Subchapter
G.
In redesignated Section 39.262(g), the substitute differs from the original
by including proposed Section 39.262(f) among the sections on which credits
or bill received by a transmission and distribution utility from its
affiliates are based.
The substitute differs from the original by redesignating Section 39.262(g)
of the original to Section 39.262(h) and by making a conforming change in
that section. In addition, the substitute adds Subdivision (4), titled
"Exchange of Assets," to redesignated Section 39.262(h).
The substitute differs from the original by redesignating Section 39.262(h)
of the original to Section 39.262(i) and by requiring the electric utility
to use the ECOM administrative model referenced in Section 39.262, rather
than Section 39.262(h), to determine estimated stranded costs. The
substitute also provides that natural gas prices used in the model must be
market-based natural gas forward prices, rather than based on the most
credible publicly available market-based data. The substitute also
requires growth rates in generating plant operations and maintenance costs
and allocated administrative and general costs to be benchmarked by
comparing those costs to the best available information on cost trends for
comparable generating plants, and requires capital additions to be
benchmarked using the limitation in proposed Section 39.259(b). In
addition, the substitute removes a provision that would have required PUC,
by rule, to establish the precise methodology to be used in updating
natural gas forecasts.
The substitute differs from the original by removing proposed Section
39.262(i) of the original, which required PUC to conduct the hearing in
this case as a contested case.
In proposed Section 39.263(c), the substitute differs from the original by
requiring reasonable costs, rather than costs, incurred under proposed
Subsections (a) and (b) to be included as invested capital and considered
in an electric utility's stranded cost determination only to the extent
that they meet certain enumerated conditions. The substitute also
specifies that the permit obtained by an unpermitted electric generating
facility must be obtained in the manner provided by proposed Section
39.264. In addition, the substitute removes proposed Subdivision (4)
(requiring resulting emission reduction credits to be conveyed to the state
for inclusion in the state implementation plan).
In proposed Section 39.263(d), the substitute differs from the original by
specifying that to determine whether the retirement of a generating
facility is the most cost-effective alternative one must take into account
the cost of replacement generating capacity. The substitute also makes a
conforming change.
The substitute differs from the original by removing proposed Section
39.263(e), which would have required PUC and the Texas Natural Resource
Conservation Commission to submit a joint report to certain government
officials, and would have set forth the material to be included in the
report.
The substitute differs from the original by redesignating proposed Section
39.264 of the original to Section 39.265. Please see the
Section-by-Section Analysis in the substitute for a complete analysis of
new Section 39.264, titled "Emissions Reductions of 'Grandfathered
Facilities'."
The substitute differs from the original in Subchapter G and H, as follows:
SUBCHAPTER G. SECURITIZATION
Sec. 39.301. PURPOSE. Provides that the purpose of this subchapter is to
enable utilities to use securitization financing to recover regulatory
assets and stranded costs.
Sec. 39.302. DEFINITIONS. Adds a definition for "regulatory assets" and
makes conforming and nonsubstantive changes.
Sec. 39.303 FINANCING ORDERS; TERMS. Adds reference to "regulatory
assets,"and adds the requirement that the PUC find that the financing order
is consistent with the standards in Section 39.301.
SUBCHAPTER H. CERTIFICATION AND REGISTRATION; PENALTIES
Sec. 39.352. CERTIFICATION OF RETAIL ELECTRIC PROVIDERS. (a)-(f) Makes
conforming and nonsubstantive changes.
(g) New subsection. Provides that if a retail electric provider serves an
aggregate load in excess of 300 megawatts within this state, not less than
five percent of the load in megawatt hours must consist of residential
customers. Provides that this requirement applies to an affiliated retail
electric provider only with respect to load served outside of the electric
utility's service area, and, in relation to that load, the affiliated
retail electric provider is required to meet the requirements of this
subsection by serving residential customers outside of the electric
utility's service area. Requires the load served by retail electric
providers that are under common ownership to be combined. Authorizes a
retail provider to meet the requirements of this subsection by
demonstrating on an annual basis that it serves residential load amounting
to five percent of its total load through the specified methods. Prohibits
qualifying residential load from including customers served by an
affiliated retail electric provider in its own service area. Requires each
retail electric provider to file reports with PUC that are necessary to
implement this subsection. Provides that this subsection applies for 36
months after retail competition begins. Requires PUC to adopt rules to
implement this subsection.
The substitute modifies the original in proposed Section 39.353(b) to
provide that "aggregator" means a person joining two or more customers,
other than municipalities and political subdivision corporations, rather
than solely municipalities, into a single purchasing unit to negotiate the
purchase of electricity from retail electric providers.
The substitute modifies the original by adding Section 39.3545
(Registration of Political Subdivision Aggregators). For more information
regarding this new section, please see the Section-by-Section Analysis
portion of this document.
The substitute modifies the original in proposed Section 39.356(a) to
remove the provision relating to PUC's authority to suspend, revoke, or
amend a retail electric provider's certificate only after notice and
opportunity for hearing. The substitute modifies Subsections (a) and (b)
of this section to include among the violations of those subsections the
failure to observe any established planning or reliability protocols.
The substitute modifies the original by adding Section 39.358 (Local
Registration of Retail Electric Provider). For a complete analysis of this
section, please see the Section-bySection Analysis portion of this
document.
The substitute modifies the original by adding a new Subchapter I
(Provisions for Certain Non-ERCOT Utilities). For a complete analysis of
this section, please see the Section-bySection Analysis portion of this
document.
The substitute redesignates proposed Sections 39.601-39.608, Subchapter I
(Miscellaneous Provisions), of the original as Sections 39.901-39.908,
Subchapter Z, in the substitute, and modifies the original as set out
herein.
The substitute modifies the original in redesignated Section 39.901(e) to
require the shortfall, if in any year the system benefit fund is
insufficient to make the transfer designated by the Texas Education Agency,
to be included in the projected revenue requirement for the system benefit
fund the next time PUC sets the fee under Section 39.903, and requires the
shortfall amount to be transferred to the Foundation School Program the
following year. The substitute modifies Subsection (g) to include rules
providing for public input among the rules adopted by the comptroller and
the commissioner of education.
The substitute modifies the original in redesignated Section 39.902(b) to
prohibit the educational program from being targeted to areas served by
municipally owned utilities or electric cooperatives that have not adopted
customer choice.
The substitute modifies the original in Section 39.903(a) to prohibit a
nonbypassable fee, rather than charge, from exceeding the specified
amount, provided that, in any year, the sum of the revenue collected
through the nonbypassable fee and any retained surplus in the system
benefit fund may not exceed 125 percent of the projected revenue
requirements for the fund. The substitute modifies the original by adding
a new Subsections (c) and (d), as follows:
(c) Prohibits the nonbypassable fee from being imposed on the retail
electric customers of a municipally owned utility or electric cooperative
before the sixth month preceding the date on which the utility or
cooperative implements customer choice. Requires PUC, on request by a
municipally owned utility or electric cooperative, to reduce the
nonbypassable fee imposed on retail electric customers served by the
municipally owned utility or electric cooperative by an amount equal to the
amount provided by the municipally owned utility or electric cooperative or
its ratepayers for local low-income programs and local programs that
educate customers about the retail electric market in a neutral and
nonpromotional manner.
(d) Requires PUC, not later than March 1 of each year, to review and
approve system benefit fund accounts, projected revenue requirements, and
proposed nonbypassable fees.
Sections 39.903(e)-(l) in the substitute are redesignated from proposed
Sections 39.603(c)(j) of the original. The substitute modifies
redesignated Section 39.903(e) to require the system benefit fund to
provide funding solely for the purposes set forth in this subsection. The
substitute modifies Section 39.903(f) to prohibit the programs to assist
low-income electric customers from being targeted to areas served by
municipally owner utilities or electric cooperatives that have not adopted
customer choice and makes conforming changes. The substitute modifies
redesignated Section 39.903(g) to delete text relating to the time that
customer choice is in effect.
The substitute modifies the original in redesignated Section 39.904(a) to
specify that it is the intent of the legislature that by January 1, 2009,
an additional 2,000 megawatts of generating capacity from renewable
technologies will have been installed in this state. Requires the
cumulative installed renewable capacity in this state to total certain
megawatts by the specified dates. The substitute removes text relating to
the goal for each retail electric provider, municipally owned utility, and
electric cooperative operating in the state to obtain a minimum of 1.65
percent of its annual capacity requirements from renewable energy
technologies by January 1, 2003, 2.15 percent of its annual capacity
requirements from renewable energy technologies by January 1, 2005, 2.75
percent of its annual capacity requirements from renewable energy
technologies by January 1, 2007, and 3 percent of its annual capacity
requirements from renewable energy technologies by January 1, 2009. The
substitute modifies Subsection (b) to require the specified entities which
do not satisfy the requirements of Subsection (a) by directly owning or
purchasing capacity using renewable energy technologies to purchase
sufficient renewable energy credits. The substitute adds new Subsections
(c) and (e), as follows:
(c) Requires PUC, no later than January 1, 2000, to adopt rules necessary
to administer and enforce this section. Requires the rules to at a minimum
achieve the enumerated goals.
(e) Authorizes a municipally owned utility operating a gas distribution
system to credit toward satisfaction of the requirements of this section
any production or acquisition of landfill gas supplied to the gas
distribution system based on a certain conversion calculation.
The substitute modifies Subsection (d), redesignated from Subsection (c),
to provide that renewable energy technologies include landfill gas.
The substitute modifies the original by adding Sections 39.9044 (Goal For
Natural Gas) and 39.9048 (Natural Gas Fuel). For a complete analysis of
this section, please see the Sectionby-Section Analysis portion of this
document.
The substitute modifies the original in redesignated Section 39.905 to set
forth the intent of the legislature in regard to energy efficiency goals,
by including the intent that electric utilities administer customer
information and energy savings incentive programs "in a market-neutral,
nondiscriminatory manner, but not offer underlying competitive services."
The substitute clarifies that it is the intent of the legislature that
electric utilities, rather than regulated utilities, acquire additional
cost-effective energy efficiency. The substitute adds Subsection (b) to
require PUC to provide oversight and adopt rules, procedures, and
penalties, as necessary, to ensure that the intent of this section is
achieved.
The substitute modifies the original in Section 39.906 to require PUC to
allow the recovery of reasonable employee related transition costs incurred
and projected for severance, retraining, early retirement, outplacement,
and related expenses for the employees.
The substitute modifies the original in redesignated Section 39.907 by
combining Subdivisions (1)-(2) and redesignating Subdivisions (3)-(4) as
(2)-(3). The substitute makes other nonsubstantive changes.
The substitute modifies the original in proposed Section 40.001 to provide
this chapter governs the transition to and the establishment of a fully
competitive electric power industry for municipally owned utilities,
notwithstanding any other law, except for Sections 39.155, 39.157(e),
39.203, 39.903 and 39.904. The substitute provides that, with respect to
the regulation of municipally owned utilities, this chapter controls over
any other provision of this title, except for sections in which the term
"municipally owned utility" is specifically used.
The substitute modifies the original in proposed Section 40.003 by changing
the term " the provisions herein contained shall be" to "this section is"
and to make conforming and nonsubstantive changes.
The substitute modifies the original bill in Section 40.004(b) to allow the
commission jurisdiction over municipally owned utilities to require
collection of the nonbypassable fee, rather than charge.
The substitute modifies the original in proposed Section 40.054(a) by
providing that the provisions of this subsection relates to customers who
have customer choice, rather than to retail customers within qualifying
power regions, without regard to geographic location.
The substitute modifies the original in proposed Section 40.059(c) by
providing that the stranded costs that may be recovered under this section
are those costs that were determined by PUC and "stated," rather than "set
forth," in PUC's April 1998 Report to the Texas Senate Interim Committee on
Electric Utility Restructuring entitled "Potentially Strandable Investment
(ECOM) Report: 1998 Update. The substitute makes conforming changes.
The substitute modifies the original by adding Section 40.061 (Unauthorized
Retail Access to Distribution Facilities). For a complete analysis of this
section, please see the Sectionby-Section Analysis portion of this
document.
The substitute modifies the original in Section 41.004 by removing the
provision relating to PUC's jurisdiction over electric cooperatives to
regulate certification of retail service areas.
The substitute modifies the original in Section 41.005 by prohibiting a
municipality from directly or indirectly regulating the rates, operations,
and services of an electric cooperative, except, with respect to
operations, to the extent necessary to protect the public health, safety,
or welfare. The substitute provides that this section does not prohibit a
municipality from making a lawful charge for the use of public
rights-of-way within the municipality as provided by Section 33.008. The
substitute requires an electric cooperative to be an electric utility for
purposes of Section 182.025, Tax Code, and Section 33.008.
The substitute modifies the original in Section 41.054 by requiring an
electric cooperative participating in customer choice to have the rights
set forth in this section, notwithstanding any provisions of Chapter 161,
and by making conforming changes.
The substitute modifies the original in Section 41.061(d) by authorizing an
electric cooperative to reconsider a rate change at any time and adjust the
rate by board resolution without additional notice or meeting of customers
if the rate as adjusted is not expected to increase the revenues from a
customer class, rather than if the rate as adjusted is within the general
scope of the notice previously provided to affected customers or is
expected to decrease the revenues of the electric cooperative. The
substitute authorizes the rates for the customer class, if notice is given
to a customer class that would receive an increase as a result of the
adjustment, to be increased without additional meeting of the customers.
In addition, the substitute authorizes a customer to petition to appeal
within the time provided in Subsection (f). The substitute modifies
Subsection (e) to authorize an electric cooperative, if the customer
agrees, to charge market-based rates to customers who have energy supply
options if rates are not increased for other customers as a result. The
substitute modifies Subsection (f) to provides that a person initiates
judicial review by filing a petition in the Travis County district court no
later than the 90th day, rather than the 60th day, after the date the
resolution is implemented. The substitute modifies Subsection (h) by
requiring the court, if the court finds that the electric cooperative's
rate violates Subsection (e), to enter the order set forth by this
subsection. The substitute provides that the order requires the refund or
credit to be made over a period of not more than 12 months, as determined
by the court, rather than the electric cooperative. The substitute adds
new Subsections (i) and (j)-(k), as follows:
(i) Prohibits a court from entering an order that delays or prohibits
implementation of a rate change or set revised rates either for the period
the challenged resolution was in effect or prospectively.
(j) Authorizes a person having obtained an order of the court requiring an
electric cooperative to set revised retail rates pursuant to Subsection
(h)(2)(A), to initiate an original proceeding in the district court of
Travis County, once the order is no longer subject to appeal, either to:
(1) seek enforcement of the court's order by writ of mandamus; or
(2) seek judicial review of the electric cooperative's most current
resolution setting rates as provided in this section.
(k) Requires an electric cooperative that has not adopted customer choice
and that has not changed each of its nonresidential rates since January 1,
1999, to adopt a resolution setting rates on or before May 1, 2002.
Require the resolution to be subject to judicial review as provided in this
section whether or not any rate is changed. Authorizes a customer, in the
event the electric cooperative fails to adopt a resolution setting rates
pursuant to this subsection, to petition for judicial review of the
electric cooperative's rates. Sets forth that the procedure to initiate
judicial review is to file a petition with the district court of Travis
County not later than November 1, 2002.
The substitute modifies the original by adding Sections 41.063 (Retail
Rates of Successor Electric Utility to Electric Cooperative) and 41.064
(Unauthorized Retail Access To Distribution Facilities). For a complete
analysis of this section, please see the Section-bySection Analysis portion
of this document.
The substitute redesignates SECTION 36 (Section 252.022, Local Government
Code) in the original to SECTION 41 in the substitute. The substitute
amends Subsection (a) to include electricity as an item to which Chapter
252 does not apply as an expenditure.
The substitute modifies the original by adding a new SECTION 42. This
section adds Chapter 303 (Energy Aggregation Measures for Local
Governments), Local Government Code. For a complete analysis of this
section, please see the Section-by-Section Analysis portion of this
document.
The substitute redesignates SECTIONS 37-49 of the original to SECTIONS
43-55 in the substitute, and makes nonsubstantive changes.
The substitute modifies the original by adding a new SECTION 56 (Section
182.025, Tax Code), effective January 1, 2002, to prohibit the total
charges relating to distribution service of an electric utility or
transmission and distribution utility within the city from exceeding the
amount or amounts prescribed by Section 33.008, Utilities Code. Authorizes
these charges to be only for distribution service. Defines "distribution
service," "electric utility," "public utility," and "transmission and
distribution utility."
The substitute redesignates SECTION 50 (proposed Section 182.027, Tax Code)
in the original to SECTION 57 in the substitute. The substitute provides
that this subchapter applies to a retail electric provider as defined in
Section 31.002(17), Utilities Code, that is owned, operated, or controlled
by an electric cooperative. The original provided that this subchapter
applies to a retail electric provider that is an organizational unit of an
electric cooperative organized under Chapter 161, Utilities Code, that is
subject to retail competition under Chapter 41, Utilities Code.
The substitute modifies the original by adding new SECTIONS 58-61. For a
complete analysis of these SECTIONS, please see the Section-by-Section
Analysis portion of this document.
The substitute redesignates SECTIONS 51 and 52 in the original to SECTIONS
62-63 in the substitute.
The substitute modifies the original by adding a new SECTION 64, to require
any person or entity that provides electric service to the institution of
higher education on December 31, 2001, to continue to offer electric
service to an institution of higher education until September 1, 2007, at a
total rate that is no higher than the rate paid by the institution on
December 31, 2001. The substitute requires the December 31, 2001, rate to
be based on the rates provided for or described in Section 36.351,
Utilities Code. In addition, the substitute defines "person or entity," to
include, but not be limited to, an electric utility, retail electric
provider, municipal corporation, cooperative corporation, or river
authority.
The substitute redesignates SECTIONS 53-56 in the original to SECTIONS
65-68 in the substitute.