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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 and cyber security |
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measures, vegetation management, and wildfire mitigation and |
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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) cyber security 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) Not later than the 180th day after an electric utility |
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files a plan under Subsection (b) that complies with any applicable |
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commission rules, the commission shall by order approve, approve |
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with modification, or deny the plan. The commission may not approve |
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a plan if the commission determines that approving the plan is not |
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in the public interest. If the commission does not issue an order |
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by the 180th day, the plan and any associated rider described by |
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Subsection (i) are considered to have been approved. |
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(f) If the commission approves the plan, the approval is not |
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considered to be a requirement for the purposes of Chapter 36 or |
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this chapter that an electric utility implement all the measures or |
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incur all the estimated costs in the plan if business needs, |
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financial conditions, or supply chain or labor conditions dictate |
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otherwise. If the commission denies the plan, the denial is not |
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considered to be a finding of the prudence or imprudence of a |
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measure or cost in the plan for the purposes of Chapter 36 or this |
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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 of the utility's most recently approved plan. The |
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commission shall review and approve, modify, or deny the updated |
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plan in the manner provided by Subsections (d), (e), and (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, |
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those costs are not subject to disallowance for exceeding the |
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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. If the commission approves the plan and |
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the electric utility filed an application for a rider, the |
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commission shall determine the appropriate terms of the rider in |
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the approval order. A rider approved under this subsection must |
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allow the electric utility to begin recovering the levelized cost |
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of implementing the approved plan at the time the plan is first |
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implemented. |
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(j) As part of a review described by Subsection (g), the |
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commission shall reconcile any rider approved in connection with |
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the previously approved plan to determine the electric utility's |
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reasonably and prudently 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 costs relating to the |
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implementation of the plan for future recovery as a regulatory |
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asset, including carrying costs at the utility's weighted average |
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cost of capital established in the commission's final order in the |
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utility's most recent base rate proceeding, and use commission |
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authorized cost recovery alternatives under Sections 35.004, |
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36.209, and 36.210 or another general rate proceeding. |
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(l) Plan costs considered by the commission to be reasonable |
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and prudent may not include the same costs otherwise recovered |
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through the electric utility's base rates and must be allocated to |
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customer classes pursuant to the rate design most recently approved |
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by the commission. If a capital investment is recoverable as a plan |
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cost, the electric utility may recover all reasonable and prudent |
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costs associated with the investment, including the annual |
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depreciation expense related to the investment calculated at the |
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utility's currently approved depreciation rates, the after-tax |
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return on the undepreciated balance of the investment calculated |
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using the rate of return approved by the commission in the utility's |
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last comprehensive base rate proceeding, and federal income tax and |
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other taxes related to the investment. |
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(m) An electric utility for which the commission has |
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approved a plan under this section is not required to submit to the |
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commission during the period in which the plan is in effect any |
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annual report required by Section 38.005 or 38.101 or by commission |
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rule adopted under those sections. This subsection does not apply |
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to an annual service quality report required by commission rule. |
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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. |