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.