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.