By Craddick                                           H.B. No. 1715
       74R4291 CBH-F
                                 A BILL TO BE ENTITLED
    1-1                                AN ACT
    1-2  relating to the determination of electric rates for certain
    1-3  marginal wells.
    1-4        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-5        SECTION 1.  Chapter 10, Title 32, Revised Statutes, is
    1-6  amended by adding Article 1446d-3 to read as follows:
    1-7        Art. 1446d-3.  MARGINAL WELL ELECTRIC RATES
    1-8        Sec. 1.  DEFINITIONS.  In this article:
    1-9              (1)  "BOED" means a barrel of oil equivalent per
   1-10  calendar day and refers to the sum of:
   1-11                    (A)  oil, condensate, and other liquid
   1-12  hydrocarbon production volume in barrels; and
   1-13                    (B)  gas production volumes, in mcf, divided by
   1-14  six.
   1-15              (2)  "Commission" means the Railroad Commission of
   1-16  Texas.
   1-17              (3)  "Electric cooperative" means an electric
   1-18  cooperative corporation organized and operating under the Electric
   1-19  Cooperative Corporation Act (Article 1528b, Vernon's Texas Civil
   1-20  Statutes).
   1-21              (4)  "Electric utility" has the meaning assigned by
   1-22  Section 3(c), Public Utility Regulatory Act (Article 1446c,
   1-23  Vernon's Texas Civil Statutes), except that the term includes only
   1-24  investor-owned electric utilities.
    2-1              (5)  "Enhanced recovery project" has the meaning
    2-2  assigned by Section 202.054, Tax Code.
    2-3              (6)  "Facilities" includes all equipment directly
    2-4  related or integral to the operation of a marginal property, high
    2-5  cost property, or enhanced recovery project.
    2-6              (7)  "Fuel cost" means a utility's cost of fuel, as
    2-7  determined by rules adopted by the Public Utility Commission of
    2-8  Texas.
    2-9              (8)  "High cost property" means a well or group of
   2-10  wells that:
   2-11                    (A)  during the preceding 12-month period,
   2-12  according to the records of the commission:
   2-13                          (i)  produced an average of not more than
   2-14  25 BOED per well; and
   2-15                          (ii)  had an average water cut of at least
   2-16  95 percent; and
   2-17                    (B)  receives electric service metered by a
   2-18  utility.
   2-19              (9)  "Marginal production electrical charge" means the
   2-20  electrical charge computed as prescribed by Section 2 of this
   2-21  article.
   2-22              (10)  "Marginal property" means a well or group of
   2-23  wells that:
   2-24                    (A)  during the preceding 12-month period,
   2-25  according to the records of the commission, produced an average of
   2-26  not more than 15 BOED per well; and
   2-27                    (B)  receives electric service metered by a
    3-1  utility.
    3-2              (11)  "Operator" means the individual, company,
    3-3  partnership, corporation, or other similar entity to whom a utility
    3-4  sends a monthly statement for electrical service to a well or
    3-5  group of wells.
    3-6              (12)  "Rate of return" means the rate of return
    3-7  approved for a utility by the Public Utility Commission of Texas.
    3-8              (13)  "Utility" means an electric cooperative or
    3-9  electric utility.
   3-10              (14)  "Water cut" means the percentage of total
   3-11  production of a well that is water.  The percentage is computed by
   3-12  dividing the volume of water produced by the total volume of all
   3-13  liquid produced.
   3-14              (15)  "Well" as it relates to the computation of
   3-15  average production, includes a production, injection, or disposal
   3-16  well.  The term does not include a temporarily abandoned well,
   3-17  plugged well, or water source well.
   3-18        Sec. 2.  COMPUTATION OF ELECTRICAL CHARGE.  (a)  The marginal
   3-19  production electrical charge that an electric utility may charge
   3-20  under this article is computed according to the following formula:
   3-21  return)(fuel cost) + fuel cost.لل
   3-22        (b)  The marginal production electrical charge an electric
   3-23  cooperative may charge under this article is the lowest wholesale
   3-24  price the electric cooperative pays for electricity multiplied by
   3-25  1.05.
   3-26        (c)  In the next billing cycle after receiving an application
   3-27  from the operator in accordance with Section 3 of this article, a
    4-1  utility shall use the applicable marginal production electrical
    4-2  charge to compute the charge for all electricity provided to the
    4-3  eligible property and facilities.
    4-4        Sec. 3.  APPLICATION FOR MARGINAL PRODUCTION ELECTRICAL
    4-5  CHARGE.  (a)  The operator of a marginal property, high cost
    4-6  property, or enhanced recovery project may apply to a utility for
    4-7  use of the marginal production electrical charge.
    4-8        (b)  The application must include:
    4-9              (1)  the operator's name, address, and telephone
   4-10  number;
   4-11              (2)  the name of the person responsible for and
   4-12  knowledgeable of the contents of the application;
   4-13              (3)  a copy of an electric bill for the property sent
   4-14  during the previous three-month period;
   4-15              (4)  a physical drawing of the field that indicates the
   4-16  property, each meter, the wells, the leases, and the applicable
   4-17  facilities;
   4-18              (5)  a separate list of the wells and the leases with
   4-19  the applicable identification number from the commission;
   4-20              (6)  a daily production report for the preceding six
   4-21  months and copies of each production report filed for the property
   4-22  with the commission during the preceding six months; and
   4-23              (7)  a computation sheet that represents the operator's
   4-24  computations demonstrating that the property qualifies for the
   4-25  marginal production electrical charge.
   4-26        (c)  The operator must send the application to the utility by
   4-27  certified mail.
    5-1        Sec. 4.  DISPUTE RESOLUTION.  (a)  The commission shall
    5-2  resolve any dispute between an operator and a utility as to whether
    5-3  a property qualifies for the marginal production electrical charge
    5-4  under this article.
    5-5        (b)  The commission's resolution under this section is
    5-6  subject to appeal under Chapter 2001, Government Code, using the
    5-7  substantial evidence rule.
    5-8        (c)  If the commission determines that a property does not
    5-9  qualify for the marginal production electrical charge under this
   5-10  article, the operator:
   5-11              (1)  shall pay all legal and administrative costs
   5-12  associated with a commission decision under this section, including
   5-13  the costs of the commission and utility; and
   5-14              (2)  may not apply to the utility for the marginal
   5-15  production electrical charge for that property before the first
   5-16  anniversary of the date on which the commission made the
   5-17  determination.
   5-18        (d)  If the commission determines that a property does
   5-19  qualify for the marginal production electrical charge under this
   5-20  article the utility shall:
   5-21              (1)  pay all legal and administrative costs associated
   5-22  with a commission decision under this section, including the costs
   5-23  of the commission and operator; and
   5-24              (2)  refund to the operator for the period beginning on
   5-25  the date on which the marginal production electrical charge would
   5-26  have taken effect under Section 2 of this article, the difference
   5-27  between the rate paid by the operator and the marginal production
    6-1  electrical charge.
    6-2        Sec. 5.  TARIFFS.  (a)  This article does not affect the
    6-3  general authority of the Public Utility Commission of Texas to
    6-4  establish electric rates.
    6-5        (b)  On receipt of an application under Section 3 of this
    6-6  article, the utility shall file a tariff with the Public Utility
    6-7  Commission of Texas prescribing the applicable fuel cost, rate of
    6-8  return, and wholesale price used in determining the marginal
    6-9  production electrical charge for that operator.  The utility must
   6-10  use the fuel cost, rate of return, and wholesale price that was
   6-11  most recently approved by the Public Utility Commission of Texas.
   6-12        Sec. 6.  APPLICATION OF OTHER LAW.  To the extent of any
   6-13  conflict with the Public Utility Regulatory Act (Article 1446c,
   6-14  Vernon's  Texas Civil Statutes), this article controls.
   6-15        SECTION 2.  This Act takes effect September 1, 1995.
   6-16        SECTION 3.  The importance of this legislation and the
   6-17  crowded condition of the calendars in both houses create an
   6-18  emergency and an imperative public necessity that the
   6-19  constitutional rule requiring bills to be read on three several
   6-20  days in each house be suspended, and this rule is hereby suspended.