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A BILL TO BE ENTITLED
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AN ACT
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relating to transmission and distribution system resiliency |
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planning by and cost recovery for electric utilities. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. The legislature finds that: |
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(1) extreme weather conditions, including high winds, |
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lightning, flooding, and freezes, can cause extraordinary damage to |
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electrical transmission and distribution facilities, resulting in |
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power outages; |
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(2) it is in the state's interest to promote the use of |
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resiliency measures to enable electrical transmission and |
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distribution infrastructure to withstand extreme weather |
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conditions, including hardening electrical transmission and |
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distribution facilities, undergrounding certain electrical |
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distribution lines, lightning mitigation measures, flood |
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mitigation measures, information technology, cybersecurity |
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measures, physical security measures, vegetation management, and |
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wildfire mitigation and response; |
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(3) protecting electrical transmission and |
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distribution infrastructure from extreme weather conditions can |
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effectively reduce system restoration costs to and outage times for |
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customers and improve system resiliency and overall service |
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reliability for customers; |
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(4) it is in the state's interest for each electric |
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utility to seek to mitigate system restoration costs to and outage |
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times for customers when developing plans to enhance electrical |
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transmission and distribution infrastructure storm resiliency; and |
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(5) all customers benefit from reduced system |
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restoration costs. |
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SECTION 2. Subchapter D, Chapter 38, Utilities Code, is |
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amended by adding Section 38.078 to read as follows: |
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Sec. 38.078. TRANSMISSION AND DISTRIBUTION SYSTEM |
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RESILIENCY PLAN AND COST RECOVERY. (a) In this section, "plan" |
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means a transmission and distribution system resiliency plan |
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described by Subsection (b). |
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(b) An electric utility may file, in a manner authorized by |
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commission rule, a plan to enhance the resiliency of the utility's |
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transmission and distribution system through at least one of the |
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following methods: |
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(1) hardening electrical transmission and |
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distribution facilities; |
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(2) modernizing electrical transmission and |
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distribution facilities; |
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(3) undergrounding certain electrical distribution |
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lines; |
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(4) lightning mitigation measures; |
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(5) flood mitigation measures; |
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(6) information technology; |
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(7) cybersecurity measures; |
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(8) physical security measures; |
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(9) vegetation management; or |
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(10) wildfire mitigation and response. |
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(c) A plan must explain the systematic approach the electric |
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utility will use to carry out the plan during at least a three-year |
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period. |
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(d) In determining whether to approve a plan filed under |
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this section, the commission shall consider: |
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(1) the extent to which the plan is expected to enhance |
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system resiliency, including whether the plan prioritizes areas of |
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lower performance; and |
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(2) the estimated costs of implementing the measures |
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proposed in the plan. |
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(e) The commission shall issue an order to approve, modify, |
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or deny a plan filed under Subsection (b) and any associated rider |
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described by Subsection (i) not later than the 180th day after the |
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plan is filed with the commission. The commission may not approve a |
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plan if the commission determines that approving the plan is not in |
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the public interest. |
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(f) For a plan approved by the commission, with or without |
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modification, an electric utility may request a good cause |
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exception on implementing all or some of the measures or incurring |
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all or some of the estimated costs in the plan if operational needs, |
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business needs, financial conditions, or supply chain or labor |
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conditions dictate the exception. The commission's denial of a |
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plan is not considered to be a finding of the prudence or imprudence |
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of a measure or cost in the plan for the purposes of Chapter 36 or |
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this chapter. |
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(g) An electric utility for which the commission has |
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approved a plan under this section may request that the commission |
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review an updated plan submitted by the electric utility. The |
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updated plan must comply with any applicable commission rules and |
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take effect on a date that is not earlier than the third anniversary |
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of the approval date of the utility's most recently approved plan. |
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The commission shall review and approve, modify, or deny the |
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updated plan in the manner provided by Subsections (d), (e), and |
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(f). |
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(h) An electric utility's implementation of a plan approved |
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under this section may not be considered imprudent for the purposes |
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of Chapter 36 or this chapter. If the commission determines that |
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the costs to implement an approved plan were prudently incurred and |
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otherwise reasonable, those costs are not subject to disallowance |
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for exceeding the estimates in the plan. |
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(i) Notwithstanding any other law, an electric utility may |
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file with a plan an application for a rider to recover all or a |
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portion of the estimated costs relating to the electric utility's |
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implementation of the plan, other than transmission-related costs. |
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If the commission approves the plan, the commission shall determine |
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the appropriate terms of the rider in the approval order. A rider |
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approved under this subsection must allow the electric utility to |
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begin recovering the levelized cost of implementing the approved |
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plan, other than transmission-related costs, at the time the plan |
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is first implemented. The commission shall adopt a procedure for |
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reconciliation of an electric utility's distribution-related |
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expenses to implement an approved plan. |
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(j) As part of a review described by Subsection (g), the |
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commission shall reconcile the rider authorized under Subsection |
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(i) to determine the electric utility's reasonably and prudently |
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incurred plan costs. |
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(k) If an electric utility that files a plan with the |
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commission does not apply for a rider under Subsection (i), the |
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utility may defer all or a portion of the distribution-related |
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costs relating to the implementation of the plan for future |
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recovery as a regulatory asset, including depreciation expense and |
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carrying costs at the utility's weighted average cost of capital |
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established in the commission's final order in the utility's most |
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recent base rate proceeding, and use commission authorized cost |
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recovery alternatives under Sections 36.209 and 36.210 or another |
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general rate proceeding. |
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(l) Plan costs considered by the commission to be reasonable |
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and prudent may include only incremental costs that are not already |
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being recovered through the electric utility's base rates or any |
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other rate rider and must be allocated to customer classes pursuant |
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to the rate design most recently approved by the commission. If a |
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capital investment is recoverable as a plan cost, the electric |
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utility may recover all reasonable and prudent costs associated |
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with the investment, including the annual depreciation expense |
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related to the investment calculated at the utility's currently |
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approved depreciation rates, the after-tax return on the |
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undepreciated balance of the investment calculated using the rate |
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of return approved by the commission in the utility's last |
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comprehensive base rate proceeding, and federal income tax and |
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other taxes related to the investment. |
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SECTION 3. The Public Utility Commission of Texas shall |
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adopt rules to implement Section 38.078, Utilities Code, as added |
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by this Act, not later than the 180th day after the effective date |
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of this Act. |
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SECTION 4. This Act takes effect immediately if it receives |
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a vote of two-thirds of all the members elected to each house, as |
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provided by Section 39, Article III, Texas Constitution. If this |
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Act does not receive the vote necessary for immediate effect, this |
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Act takes effect September 1, 2023. |