1-1        By:  Armbrister                                  S.B. No. 373
    1-2        (In the Senate - Filed March 10, 1995; March 14, 1995, read
    1-3  first time and referred to Committee on State Affairs;
    1-4  April 18, 1995, reported adversely, with favorable Committee
    1-5  Substitute by the following vote:  Yeas 13, Nays 0; April 18, 1995,
    1-6  sent to printer.)
    1-7  COMMITTEE SUBSTITUTE FOR S.B. No. 373               By:  Armbrister
    1-8                         A BILL TO BE ENTITLED
    1-9                                AN ACT
   1-10  relating to the continuation, operations, and functions of the
   1-11  Public Utility Commission of Texas and the Office of Public Utility
   1-12  Counsel; providing penalties.
   1-13        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
   1-14                               ARTICLE 1
   1-15        SECTION 1.01.  Section 1.003, Public Utility Regulatory Act
   1-16  of 1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
   1-17  Regular Session, 1995, is amended by adding Subdivisions (13A) and
   1-18  (18) to read as follows:
   1-19              (13A)  "Ratemaking proceeding" means any proceeding
   1-20  before a regulatory authority which may affect a rate as a direct
   1-21  or indirect result of the proceeding.
   1-22              (18)  "Trade association" means a nonprofit,
   1-23  cooperative, and voluntarily joined association of business or
   1-24  professional persons who are employed by public utilities or
   1-25  utility competitors to assist the public utility industry, a
   1-26  utility competitor, or the industry's or competitor's employees in
   1-27  dealing with mutual business or professional problems and in
   1-28  promoting their common interest.
   1-29        SECTION 1.02.  Section 1.005, Public Utility Regulatory Act
   1-30  of 1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
   1-31  Regular Session, 1995, is amended to read as follows:
   1-32        Sec. 1.005.  APPLICABILITY OF ADMINISTRATIVE PROCEDURE ACT
   1-33  AND OPEN MEETINGS LAW.  (a)  Chapter 2001, Government Code, applies
   1-34  to all proceedings under this Act except to the extent inconsistent
   1-35  with this Act.  Communications of members and employees of the
   1-36  commission with a party, a party's representative, or other persons
   1-37  are governed by Section 2001.061, Government Code.
   1-38        (b)  The commission is subject to Chapter 551, Government
   1-39  Code.
   1-40        SECTION 1.03.  Subtitle A, Title I, Public Utility Regulatory
   1-41  Act of 1995, as enacted by S.B.  No. 319, Acts of the 74th
   1-42  Legislature, Regular Session, 1995, is amended by adding Section
   1-43  1.006 to read as follows:
   1-44        Sec. 1.006.  ENTITY, COMPETITOR, OR SUPPLIER AFFECTED IN
   1-45  MANNER OTHER THAN BY SETTING OF RATES.  In this Act, an entity,
   1-46  utility competitor, or utility supplier is considered to be
   1-47  affected in a manner other than by the setting of rates for that
   1-48  class of customer if during a relevant calendar year the entity
   1-49  provides fuel, utility-related goods, utility-related products, or
   1-50  utility-related services to a regulated or unregulated provider of
   1-51  telecommunications or electric services or to an affiliated
   1-52  interest in an amount equal to the greater of $10,000 or 10 percent
   1-53  of the person's business.
   1-54        SECTION 1.04.  Subsections (c) and (d), Section 1.021, Public
   1-55  Utility Regulatory Act of 1995, as enacted by S.B. No. 319, Acts of
   1-56  the 74th Legislature, Regular Session, 1995, are amended to read as
   1-57  follows:
   1-58        (c)  The governor shall designate a member of the commission
   1-59  as presiding officer of the commission to serve in that capacity at
   1-60  the pleasure of the governor.  <At its first meeting following the
   1-61  biennial appointment and qualification of a commissioner, the
   1-62  commission shall elect one of the commissioners chairman.>
   1-63        (d)  Appointments to the commission shall be made without
   1-64  regard to the race, color, disability <creed>, sex, religion, age,
   1-65  or national origin of the appointees.
   1-66        SECTION 1.05.  Section 1.022, Public Utility Regulatory Act
   1-67  of 1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
   1-68  Regular Session, 1995, is amended to read as follows:
    2-1        Sec. 1.022.  SUNSET PROVISION.  The Public Utility Commission
    2-2  of Texas and the Office of Public Utility Counsel are subject to
    2-3  Chapter 325, Government Code (Texas Sunset Act).  Unless continued
    2-4  in existence as provided by that chapter, the commission and the
    2-5  office are abolished and this Act expires September 1, 2001 <1995>.
    2-6        SECTION 1.06.  Section 1.023, Public Utility Regulatory Act
    2-7  of 1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
    2-8  Regular Session, 1995, is amended to read as follows:
    2-9        Sec. 1.023.  QUALIFICATIONS; OATH <AND BOND>; PROHIBITED
   2-10  ACTIVITIES.  (a)  To be eligible for appointment as a commissioner,
   2-11  a person must be a qualified voter, <not less than 30 years of
   2-12  age,> a citizen of the United States, <and> a resident of the State
   2-13  of Texas, and a representative of the general public.
   2-14        (b)  Each commissioner shall qualify for office by taking the
   2-15  oath prescribed for other state officers <and shall execute a bond
   2-16  for $5,000 payable to the state and conditioned on the faithful
   2-17  performance of his duties>.
   2-18        (c)  A person is not eligible for appointment as a
   2-19  commissioner if at any time during the two-year period immediately
   2-20  preceding his appointment he personally served as an officer,
   2-21  director, owner, employee, partner, or legal representative of any
   2-22  public utility, <or any> affiliated interest, or direct competitor
   2-23  of a public utility or he owned or controlled, directly or
   2-24  indirectly, stocks or bonds of any class with a value of $10,000 or
   2-25  more in a public utility, <or any> affiliated interest, or direct
   2-26  competitor of a public utility.
   2-27        (d)  A person who is required to register as a lobbyist under
   2-28  Chapter 305, Government Code, because of the person's activities
   2-29  for compensation on behalf of a profession related to the operation
   2-30  of the commission may not serve as a member of the commission or
   2-31  public utility counsel or act as the general counsel to the
   2-32  commission.
   2-33        (e)  A person is not eligible for appointment as a public
   2-34  member of the commission or for employment as the general counsel
   2-35  or executive director of the commission if:
   2-36              (1)  the person serves on the board of directors of a
   2-37  company that supplies fuel, utility-related services, or
   2-38  utility-related products to regulated or unregulated electric or
   2-39  telecommunications utilities; or
   2-40              (2)  the person or the person's spouse:
   2-41                    (A)  is employed by or participates in the
   2-42  management of a business entity or other organization regulated by
   2-43  the commission or receiving funds from the commission;
   2-44                    (B)  owns or controls, directly or indirectly,
   2-45  more than a 10 percent interest or a pecuniary interest with a
   2-46  value exceeding $10,000 in:
   2-47                          (i)  a business entity or other
   2-48  organization regulated by the commission or receiving funds from
   2-49  the commission; or
   2-50                          (ii)  any utility competitor, utility
   2-51  supplier, or other entity affected by a commission decision in a
   2-52  manner other than by the setting of rates for that class of
   2-53  customer;
   2-54                    (C)  uses or receives a substantial amount of
   2-55  tangible goods, services, or funds from the commission, other than
   2-56  compensation or reimbursement authorized by law for commission
   2-57  membership, attendance, or expenses; or
   2-58                    (D)  notwithstanding Paragraph (B) of this
   2-59  subdivision, has an interest in a mutual fund or retirement fund in
   2-60  which more than 10 percent of the fund's holdings at the time of
   2-61  appointment is in a single utility, utility competitor, or utility
   2-62  supplier in this state and the person does not disclose this
   2-63  information to the governor, senate, commission, or other entity,
   2-64  as appropriate.
   2-65        (f)  Notwithstanding any other provision of this Act, a
   2-66  person otherwise ineligible because of the application of
   2-67  Subsection (e)(2)(B) of this section may be appointed to the
   2-68  commission and serve as a commissioner or may be employed as the
   2-69  general counsel or executive director if the person:
   2-70              (1)  notifies the attorney general and commission that
    3-1  the person is ineligible because of the application of Subsection
    3-2  (e)(2)(B) of this section; and
    3-3              (2)  divests the person or the person's spouse of the
    3-4  ownership or control before beginning service or employment, or
    3-5  within a reasonable time if the person is already serving or
    3-6  employed at the time Subsection (e)(2)(B) of this section first
    3-7  applies to the person.
    3-8        (g)  An officer, employee, or paid consultant of a trade
    3-9  association in the field of public utilities may not be a member or
   3-10  employee of the commission who is exempt from the state's position
   3-11  classification plan or is compensated at or above the amount
   3-12  prescribed by the General Appropriations Act for step 1, salary
   3-13  group 17, of the position classification salary schedule.
   3-14        (h)  A person who is a spouse of an officer, manager, or paid
   3-15  consultant of a trade association in the field of public utilities
   3-16  may not be a commission member and may not be a commission employee
   3-17  who is exempt from the state's position classification plan or is
   3-18  compensated at or above the amount prescribed by the General
   3-19  Appropriations Act for step 1, salary group 17, of the position
   3-20  classification salary schedule.
   3-21        SECTION 1.07.  Subsections (a), (d), and (e), Section 1.024,
   3-22  Public Utility Regulatory Act of 1995, as enacted by S.B. No. 319,
   3-23  Acts of the 74th Legislature, Regular Session, 1995, are amended to
   3-24  read as follows:
   3-25        (a)  A commissioner or employee of the commission may not do
   3-26  any of the following during his period of service with the
   3-27  commission:
   3-28              (1)  have any pecuniary interest, either as an officer,
   3-29  director, partner, owner, employee, attorney, consultant, or
   3-30  otherwise, in any public utility or affiliated interest, or in any
   3-31  person or corporation or other business entity a significant
   3-32  portion of whose business consists of furnishing goods or services
   3-33  to public utilities or affiliated interests, but not including a
   3-34  nonprofit group or association solely supported by gratuitous
   3-35  contributions of money, property or services, other than a trade
   3-36  association;
   3-37              (2)  own or control any securities in a public utility,
   3-38  <or> affiliated interest, or direct competitor of a public utility,
   3-39  either directly or indirectly; or
   3-40              (3)  accept any gift, gratuity, or entertainment
   3-41  whatsoever from any public utility, <or> affiliated interest, or
   3-42  direct competitor of a public utility, or from any person,
   3-43  corporation, agent, representative, employee, or other business
   3-44  entity a significant portion of whose business consists of
   3-45  furnishing goods or services to public utilities, <or> affiliated
   3-46  interests, or direct competitors of public utilities, or from any
   3-47  agent, representative, attorney, employee, officer, owner,
   3-48  director, or partner of any such business entity or of any public
   3-49  utility, <or> affiliated interest, or direct competitor of a public
   3-50  utility; provided, however, that the receipt and acceptance of any
   3-51  gifts, gratuities, or entertainment after termination of service
   3-52  with the commission whose cumulative value in any one-year period
   3-53  is less than $100 does not constitute a violation of this Act.
   3-54        (d)  A public utility, <or> affiliated interest, or direct
   3-55  competitor of a public utility, or any person, corporation, firm,
   3-56  association, or business that furnishes goods or services to any
   3-57  public utility, <or> affiliated interest, or direct competitor of a
   3-58  public utility, or any agent, representative, attorney, employee,
   3-59  officer, owner, director, or partner of any public utility, <or>
   3-60  affiliated interest, or direct competitor of a public utility, or
   3-61  any person, corporation, firm, association, or business furnishing
   3-62  goods or services to any public utility, <or> affiliated interest,
   3-63  or direct competitor of a public utility may not give or offer to
   3-64  give any gift, gratuity, employment, or entertainment whatsoever to
   3-65  any member or employee of the commission except as allowed by
   3-66  Subdivision (3) of Subsection (a) of this section, nor may any such
   3-67  public utility, <or> affiliated interest, or direct competitor of a
   3-68  public utility or any such person, corporation, firm, association,
   3-69  or business aid, abet, or participate with any member, employee, or
   3-70  former employee of the commission in any activity or conduct that
    4-1  would constitute a violation of this subsection or Subdivision (3)
    4-2  of Subsection (a) of this section.
    4-3        (e)  It is not a violation of this section if a member of the
    4-4  commission or a person employed by the commission, upon becoming
    4-5  the owner of any stocks or bonds or other pecuniary interest in a
    4-6  public utility, <or> affiliated interest, or direct competitor of a
    4-7  public utility <under the jurisdiction of the commission> otherwise
    4-8  than voluntarily, informs the commission and the attorney general
    4-9  of such ownership and divests himself of the ownership or interest
   4-10  within a reasonable time.  In this section, a "pecuniary interest"
   4-11  includes income, compensation, and payment of any kind, in addition
   4-12  to ownership interests.  It is not a violation of this section if
   4-13  such a pecuniary interest is held indirectly by ownership of an
   4-14  interest in a retirement system, institution, or fund which in the
   4-15  normal course of business invests in diverse securities
   4-16  independently of the control of the commissioner or employee.
   4-17        SECTION 1.08.  Section 1.025, Public Utility Regulatory Act
   4-18  of 1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
   4-19  Regular Session, 1995, is amended to read as follows:
   4-20        Sec. 1.025.  PROHIBITION OF EMPLOYMENT OR REPRESENTATION.
   4-21  (a)  A commissioner may not within two years, and an employee of
   4-22  the commission or an employee of the State Office of Administrative
   4-23  Hearings involved in hearing utility cases may not, within one year
   4-24  after his employment with the commission or the State Office of
   4-25  Administrative Hearings has ceased, be employed by:
   4-26              (1)  a public utility or affiliate which was in the
   4-27  scope of the commissioner's or employee's official responsibility
   4-28  while the commissioner or employee was associated with the
   4-29  commission or the State Office of Administrative Hearings; or
   4-30              (2)  a utility competitor or other entity affected in a
   4-31  manner other than by the setting of rates for that class of
   4-32  customer.
   4-33        (b)  During the time a commissioner or employee of the
   4-34  commission or an employee of the State Office of Administrative
   4-35  Hearings involved in hearing utility cases is associated with the
   4-36  commission or State Office of Administrative Hearings or at any
   4-37  time after, the commissioner or employee may not represent a
   4-38  person, corporation, or other business entity before the commission
   4-39  or State Office of Administrative Hearings or a court in a matter
   4-40  in which the commissioner or employee was personally involved while
   4-41  associated with the commission or State Office of Administrative
   4-42  Hearings or a matter that was within the commissioner's or
   4-43  employee's official responsibility while the commissioner or
   4-44  employee was associated with the commission or State Office of
   4-45  Administrative Hearings.
   4-46        (c)  The commission shall require its members and employees
   4-47  to read this section and Section 1.024 of this Act and as often as
   4-48  necessary shall provide information regarding their qualifications
   4-49  for office or employment under this Act and their responsibilities
   4-50  under applicable laws relating to standards of conduct for state
   4-51  officers and employees.
   4-52        SECTION 1.09.  Section 1.026, Public Utility Regulatory Act
   4-53  of 1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
   4-54  Regular Session, 1995, is amended to read as follows:
   4-55        Sec. 1.026.  GROUNDS FOR REMOVAL; VALIDITY OF ACTIONS.
   4-56  (a)  It is a ground for removal from the commission if a member:
   4-57              (1)  does not have at the time of appointment the
   4-58  qualifications required by Section 1.023 of this Act <for
   4-59  appointment to the commission>; <or>
   4-60              (2)  does not maintain during <the> service on the
   4-61  commission the qualifications required by Section 1.023 of this
   4-62  Act;
   4-63              (3)  violates a prohibition established by Section
   4-64  1.023, 1.024, or 1.025 of this Act;
   4-65              (4)  cannot discharge the member's duties for a
   4-66  substantial part of the term for which the member is appointed
   4-67  because of illness or disability; or
   4-68              (5)  is absent from more than half of the regularly
   4-69  scheduled commission meetings that the member is eligible to attend
   4-70  during a calendar year unless the absence is excused by majority
    5-1  vote of <for appointment to> the commission.
    5-2        (b)  The validity of an action of the commission is not
    5-3  affected by the fact that it is <was> taken when a ground for
    5-4  removal of a commission member exists <of the commission existed>.
    5-5        (c)  If the executive director has knowledge that a potential
    5-6  ground for removal exists, the executive director shall notify the
    5-7  presiding officer of the commission of the potential ground.  The
    5-8  presiding officer shall then notify the governor and the attorney
    5-9  general that a potential ground for removal exists.  If the
   5-10  potential ground for removal involves the presiding officer of the
   5-11  commission, the executive director shall notify the next highest
   5-12  officer of the commission, who shall notify the governor and the
   5-13  attorney general that a potential ground for removal exists.
   5-14        (d)  Before a member of the commission may assume the
   5-15  member's duties and before the member may be confirmed by the
   5-16  senate, the member must complete at least one course of the
   5-17  training program established under this section.
   5-18        (e)  A training program established under this section shall
   5-19  provide information to the member regarding:
   5-20              (1)  the enabling legislation that created the
   5-21  commission and its policymaking body to which the member is
   5-22  appointed to serve;
   5-23              (2)  the programs operated by the commission;
   5-24              (3)  the role and functions of the commission;
   5-25              (4)  the rules of the commission with an emphasis on
   5-26  the rules that relate to disciplinary and investigatory authority;
   5-27              (5)  the current budget for the commission;
   5-28              (6)  the results of the most recent formal audit of the
   5-29  commission;
   5-30              (7)  the requirements of Chapters 551, 552, and 2001,
   5-31  Government Code;
   5-32              (8)  the requirements of the conflict of interest laws
   5-33  and other laws relating to public officials; and
   5-34              (9)  any applicable ethics policies adopted by the
   5-35  commission or the Texas Ethics Commission.
   5-36        SECTION 1.10.  Subsections (a), (b), and (e), Section 1.028,
   5-37  Public Utility Regulatory Act of 1995, as enacted by S.B. No. 319,
   5-38  Acts of the 74th Legislature, Regular Session, 1995, are amended to
   5-39  read as follows:
   5-40        (a)  The commission shall employ an executive director, a
   5-41  general counsel, and such officers<, administrative law judges,
   5-42  hearing examiners, investigators, lawyers, engineers, economists,
   5-43  consultants, statisticians, accountants, administrative assistants,
   5-44  inspectors, clerical staff,> and other employees as it deems
   5-45  necessary to carry out the provisions of this Act.  All employees
   5-46  receive such compensation as is fixed by the legislature.  The
   5-47  commission shall develop and implement policies that clearly define
   5-48  the respective responsibilities of the commission and the staff of
   5-49  the commission.
   5-50        (b)  The executive director is responsible for the day-to-day
   5-51  operations of the commission and shall coordinate the activities of
   5-52  commission employees <commission shall employ the following:>
   5-53              <(1)  an executive director;>
   5-54              <(2)  a director of hearings who has wide experience in
   5-55  utility regulation and rate determination;>
   5-56              <(3)  a chief engineer who is a registered engineer and
   5-57  an expert in public utility engineering and rate matters;>
   5-58              <(4)  a chief accountant who is a certified public
   5-59  accountant, experienced in public utility accounting;>
   5-60              <(5)  a director of research who is experienced in the
   5-61  conduct of analyses of industry, economics, energy, fuel, and other
   5-62  related matters that the commission may want to undertake;>
   5-63              <(6)  a director of consumer affairs and public
   5-64  information;>
   5-65              <(7)  a director of utility evaluation;>
   5-66              <(8)  a director of energy conservation; and>
   5-67              <(9)  a general counsel.>
   5-68        <(e)  The commission shall employ administrative law judges
   5-69  to preside at hearings of major importance before the commission.
   5-70  An administrative law judge must be a licensed attorney with not
    6-1  less than five years' general experience or three years' experience
    6-2  in utility regulatory law.  The administrative law judge shall
    6-3  perform his duties independently from the commission>.
    6-4        SECTION 1.11.  Section 1.029, Public Utility Regulatory Act
    6-5  of 1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
    6-6  Regular Session, 1995, is amended to read as follows:
    6-7        Sec. 1.029.  PERSONNEL POLICIES.  (a)  The executive director
    6-8  or the executive director's <his> designee shall develop an
    6-9  intra-agency career ladder program that addresses opportunities for
   6-10  mobility and advancement for employees of the commission.  The
   6-11  program shall require intra-agency posting of all positions
   6-12  concurrently with<, one part of which shall be the intra-agency
   6-13  posting of all nonentry level positions for at least 10 days
   6-14  before> any public posting.  The executive director or the
   6-15  executive director's <his> designee shall develop a system of
   6-16  annual performance evaluations that are based on documented
   6-17  employee performance <measurable job tasks>.  All merit pay for
   6-18  commission employees must be based on the system established under
   6-19  this section.
   6-20        (b)  The executive director or the executive director's
   6-21  <his/her> designee shall prepare and maintain a written policy
   6-22  statement <plan> to assure implementation of a program of equal
   6-23  employment opportunity under which <whereby> all personnel
   6-24  transactions are made without regard to race, color, disability,
   6-25  sex, religion, age, or national origin.  The policy statement must
   6-26  <plan shall> include:
   6-27              (1)  personnel policies that comply with Chapter 21,
   6-28  Labor Code, including policies relating to recruitment, evaluation,
   6-29  selection, appointment, training, and promotion of personnel;
   6-30              (2)  a comprehensive analysis of the commission
   6-31  workforce that meets federal and state guidelines;
   6-32              (3)  procedures by which a determination can be made
   6-33  about the extent of underuse in the commission workforce of all
   6-34  persons for whom federal or state guidelines encourage a more
   6-35  equitable balance; and
   6-36              (4)  reasonable methods to appropriately address the
   6-37  underuse.  <a comprehensive analysis of all the agency's workforce
   6-38  by race, sex, ethnic origin, class of position, and salary or wage;>
   6-39              <(2)  plans for recruitment, evaluation, selection,
   6-40  appointment, training, promotion, and other personnel policies;>
   6-41              <(3)  steps reasonably designed to overcome any
   6-42  identified underutilization of minorities and women in the agency's
   6-43  workforce; and>
   6-44              <(4)  objectives and goals, timetables for the
   6-45  achievement of the objectives and goals, and assignments of
   6-46  responsibility for their achievement.>
   6-47        (c)  The policy statement <plan> required under Subsection
   6-48  (b) of this section must <shall be filed with the governor's office
   6-49  within 60 days of the effective date of this Act,> cover an annual
   6-50  period, <and> be updated at least annually and reviewed by the
   6-51  Commission on Human Rights for compliance with Subsection (b)(1) of
   6-52  this section, and<.  Progress reports shall> be filed with
   6-53  <submitted to> the governor's office <within 30 days of November 1
   6-54  and April 1 of each year and shall include the steps the agency has
   6-55  taken within the reporting period to comply with these
   6-56  requirements>.
   6-57        (d)  The governor's office shall deliver a biennial report to
   6-58  the legislature based on the information received under Subsection
   6-59  (c) of this section.  The report may be made separately or as a
   6-60  part of other biennial reports made to the legislature.
   6-61        SECTION 1.12.  Section 1.031, Public Utility Regulatory Act
   6-62  of 1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
   6-63  Regular Session, 1995, is amended to read as follows:
   6-64        Sec. 1.031.  OFFICE; MEETINGS.  (a)  The principal office of
   6-65  the commission shall be located in the City of Austin, Texas, and
   6-66  shall be open daily during the usual business hours, Saturdays,
   6-67  Sundays, and legal holidays excepted.  The commission shall hold
   6-68  meetings at its office and at such other convenient places in the
   6-69  state as shall be expedient and necessary for the proper
   6-70  performance of its duties.
    7-1        (b)  The commission shall develop and implement policies that
    7-2  provide the public with a reasonable opportunity to appear before
    7-3  the commission and to speak on any issue under the jurisdiction of
    7-4  the commission.
    7-5        SECTION 1.13.  Subsection (a), Section 1.035, Public Utility
    7-6  Regulatory Act of 1995, as enacted by S.B. No. 319, Acts of the
    7-7  74th Legislature, Regular Session, 1995, is amended to read as
    7-8  follows:
    7-9        (a)  The commission shall prepare annually a complete and
   7-10  detailed written report accounting for all funds received and
   7-11  disbursed by the commission during the preceding fiscal year.  The
   7-12  annual report must meet the reporting requirements applicable to
   7-13  financial reporting in the General Appropriations Act <publish an
   7-14  annual report to the governor, summarizing its proceedings, listing
   7-15  its receipts and the sources of its receipts, listing its
   7-16  expenditures and the nature of such expenditures, and setting forth
   7-17  such other information concerning the operations of the commission
   7-18  and the public utility industry as it considers of general
   7-19  interest>.
   7-20        SECTION 1.14.  Section 1.036, Public Utility Regulatory Act
   7-21  of 1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
   7-22  Regular Session, 1995, is amended to read as follows:
   7-23        Sec. 1.036.  <CONSUMER> INFORMATION; ACCESSIBILITY.  (a)  The
   7-24  commission shall prepare information of public <consumer> interest
   7-25  describing the <regulatory> functions of the commission and
   7-26  <describing> the commission's procedures by which <consumer>
   7-27  complaints are filed with and resolved by the commission.  The
   7-28  commission shall make the information available to the <general>
   7-29  public and appropriate state agencies.
   7-30        (b)  The commission by rule shall establish methods by which
   7-31  consumers and service recipients are notified of the name, mailing
   7-32  address, and telephone number of the commission for the purpose of
   7-33  directing complaints to the commission.
   7-34        (c)  The commission shall comply with federal and state laws
   7-35  related to program and facility accessibility.  The commission
   7-36  shall also prepare and maintain a written plan that describes how a
   7-37  person who does not speak English can be provided reasonable access
   7-38  to the commission's programs and services.
   7-39        SECTION 1.15.  Section 1.051, Public Utility Regulatory Act
   7-40  of 1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
   7-41  Regular Session, 1995, is amended to read as follows:
   7-42        Sec. 1.051.  OFFICE OF PUBLIC UTILITY COUNSEL.  (a)  The
   7-43  independent Office of Public Utility Counsel represents the
   7-44  interests of residential and small commercial consumers.
   7-45        (b)  The chief executive of the office <Office of Public
   7-46  Utility Counsel> is the public utility counsel, hereinafter
   7-47  referred to as counsellor.  The counsellor is appointed by the
   7-48  governor with the advice and consent of the senate to a two-year
   7-49  term that expires on February 1 of the final year of the term.
   7-50  Appointment of the counsellor shall be made without regard to the
   7-51  race, color, disability, sex, religion, age, or national origin of
   7-52  the appointee.
   7-53        (c)  The counsellor shall be a resident of Texas and admitted
   7-54  to the practice of law in this state who has demonstrated a strong
   7-55  commitment and involvement in efforts to safeguard the rights of
   7-56  the public and possesses the knowledge and experience necessary to
   7-57  practice effectively in utility proceedings.
   7-58        (d)  A person is not eligible for appointment as counsellor
   7-59  if the person or the person's spouse:
   7-60              (1)  is employed by or participates in the management
   7-61  of a business entity or other organization regulated by the
   7-62  commission or receiving funds from the commission;
   7-63              (2)  owns or controls, directly or indirectly, more
   7-64  than a 10 percent interest or a pecuniary interest with a value
   7-65  exceeding $10,000 in:
   7-66                    (A)  a business entity or other organization
   7-67  regulated by the commission or receiving funds from the commission
   7-68  or the office; or
   7-69                    (B)  any utility competitor, utility supplier, or
   7-70  other entity affected by a commission decision in a manner other
    8-1  than by the setting of rates for that class of customer;
    8-2              (3)  uses or receives a substantial amount of tangible
    8-3  goods, services, or funds from the commission or the office, other
    8-4  than compensation or reimbursement authorized by law for counsellor
    8-5  or commission membership, attendance, or expenses; or
    8-6              (4)  notwithstanding Subdivision (2) of this
    8-7  subsection, has an interest in a mutual fund or retirement fund in
    8-8  which more than 10 percent of the fund's holdings is in a single
    8-9  utility, utility competitor, or utility supplier in this state and
   8-10  the person does not disclose this information to the governor,
   8-11  senate, or other entity, as appropriate.
   8-12        (e)  A person may not serve as counsellor or act as the
   8-13  general counsel for the office if the person is required to
   8-14  register as a lobbyist under Chapter 305, Government Code, because
   8-15  of the person's activities for compensation related to the
   8-16  operation of the commission or the office.
   8-17        (f)  An officer, employee, or paid consultant of a trade
   8-18  association in the field of public utilities may not serve as
   8-19  counsellor or be an employee of the office who is exempt from the
   8-20  state's position classification plan or is compensated at or above
   8-21  the amount prescribed by the General Appropriations Act for step 1,
   8-22  salary group 17, of the position classification salary schedule.  A
   8-23  person who is the spouse of an officer, manager, or paid consultant
   8-24  of a trade association in the field of public utilities may not
   8-25  serve as counsellor and may not be an office employee who is exempt
   8-26  from the state's position classification plan or is compensated at
   8-27  or above the amount prescribed by the General Appropriations Act
   8-28  for step 1, salary group 17, of the position classification salary
   8-29  schedule.
   8-30        (g)  Notwithstanding any other provision of this Act, a
   8-31  person otherwise ineligible because of the application of
   8-32  Subsection (d)(2) of this section may be appointed as counsellor
   8-33  and may serve as counsellor if the person:
   8-34              (1)  notifies the attorney general and commission that
   8-35  the person is ineligible because of the application of Subsection
   8-36  (d)(2) of this section; and
   8-37              (2)  divests the person or the person's spouse of the
   8-38  ownership or control before appointment, or within a reasonable
   8-39  time if the person is already serving at the time Subsection (d)(2)
   8-40  of this section first applies to the person.
   8-41        SECTION 1.16.  Subtitle C, Title I, Public Utility Regulatory
   8-42  Act of 1995, as enacted by S.B. No. 319, Acts of the 74th
   8-43  Legislature, Regular Session, 1995, is amended by adding Section
   8-44  1.0511 to read as follows:
   8-45        Sec. 1.0511.  GROUNDS FOR REMOVAL.  (a)  It is a ground for
   8-46  removal from office if the counsellor:
   8-47              (1)  does not have at the time of appointment the
   8-48  qualifications required by Section 1.051 of this Act;
   8-49              (2)  does not maintain during service as counsellor the
   8-50  qualifications required by Section 1.051 of this Act;
   8-51              (3)  violates a prohibition established by Section
   8-52  1.051 or 1.0512 of this Act; or
   8-53              (4)  cannot discharge the counsellor's duties for a
   8-54  substantial part of the term for which the counsellor is appointed
   8-55  because of illness or disability.
   8-56        (b)  The validity of an action of the office is not affected
   8-57  by the fact that it is taken when a ground for removal of the
   8-58  counsellor exists.
   8-59        SECTION 1.17.  Subtitle C, Title I, Public Utility Regulatory
   8-60  Act of 1995, as enacted by S.B. No. 319, Acts of the 74th
   8-61  Legislature, Regular Session, 1995, is amended by adding Section
   8-62  1.0512 to read as follows:
   8-63        Sec. 1.0512.  PROHIBITION OF EMPLOYMENT OR REPRESENTATION.
   8-64  (a)  The counsellor may not within two years, and an employee of
   8-65  the office may not, within one year after his employment with the
   8-66  office has ceased, be employed by a public utility which was in the
   8-67  scope of the counsellor's or employee's official responsibility
   8-68  while the counsellor or employee was associated with the office.
   8-69        (b)  During the time the counsellor or an employee of the
   8-70  office is associated with the office or at any time after, the
    9-1  counsellor or employee may not represent a person, corporation, or
    9-2  other business entity before the commission or a court in a matter
    9-3  in which the counsellor or employee was personally involved while
    9-4  associated with the office or a matter that was within the
    9-5  counsellor's or employee's official responsibility while the
    9-6  counsellor or employee was associated with the office.
    9-7        SECTION 1.18.  Subtitle C, Title I, Public Utility Regulatory
    9-8  Act of 1995, as enacted by S.B. No. 319, Acts of the 74th
    9-9  Legislature, Regular Session, 1995, is amended by adding Section
   9-10  1.0513 to read as follows:
   9-11        Sec. 1.0513.  INFORMATION; ACCESSIBILITY.  (a)  The office
   9-12  shall prepare annually a complete and detailed written report
   9-13  accounting for all funds received and disbursed by the office
   9-14  during the preceding fiscal year.  The annual report must meet the
   9-15  reporting requirements applicable to financial reporting provided
   9-16  in the General Appropriations Act.
   9-17        (b)  The office shall prepare information of public interest
   9-18  describing the functions of the office.  The office shall make the
   9-19  information available to the public and appropriate state agencies.
   9-20        (c)  The office shall comply with federal and state laws
   9-21  related to program and facility accessibility.  The office shall
   9-22  also prepare and maintain a written plan that describes how a
   9-23  person who does not speak English can be provided reasonable access
   9-24  to the office's programs and services.
   9-25        SECTION 1.19.  Section 1.052, Public Utility Regulatory Act
   9-26  of 1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
   9-27  Regular Session, 1995, is amended to read as follows:
   9-28        Sec. 1.052.  INTEREST PROHIBITED.  During the period of the
   9-29  counsellor's employment and for a period of two years following the
   9-30  termination of employment, it shall be unlawful for any person
   9-31  employed as counsellor to have a direct or indirect interest in any
   9-32  utility company regulated under this Act, to provide legal services
   9-33  directly or indirectly to or be employed in any capacity by a
   9-34  utility company regulated under this Act, its parent, or its
   9-35  subsidiary companies, corporations, or cooperatives or a utility
   9-36  competitor, utility supplier, or other entity affected in a manner
   9-37  other than by the setting of rates for that class of customer; but
   9-38  such person may otherwise engage in the private practice of law
   9-39  after the termination of employment as counsellor.
   9-40        SECTION 1.20.  Section 1.053, Public Utility Regulatory Act
   9-41  of 1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
   9-42  Regular Session, 1995, is amended to read as follows:
   9-43        Sec. 1.053.  EMPLOYEES.  (a)  The counsellor may employ such
   9-44  lawyers, economists, engineers, consultants, statisticians,
   9-45  accountants, clerical staff, and other employees as he or she deems
   9-46  necessary to carry out the provisions of this section.  All
   9-47  employees shall receive such compensation as is fixed by the
   9-48  legislature from the assessment imposed by Section 1.351 of this
   9-49  Act.
   9-50        (b)  The counsellor or the counsellor's designee shall
   9-51  develop an intra-agency career ladder program that addresses
   9-52  opportunities for mobility and advancement for employees within the
   9-53  commission.  The program shall require intra-agency postings of all
   9-54  positions concurrently with any public posting.  The counsellor or
   9-55  the counsellor's designee shall develop a system of annual
   9-56  performance evaluations that are based on documented employee
   9-57  performance.  All merit pay for office employees must be based on
   9-58  the system established under this subsection.  The counsellor or
   9-59  the counsellor's designee shall provide to the public utility
   9-60  counsel and its employees, as often as necessary, information
   9-61  regarding their qualification for office or employment under this
   9-62  Act and their responsibilities under applicable laws relating to
   9-63  standards of conduct for state officers or employees.
   9-64        (c)  The counsellor or the counsellor's designee shall
   9-65  prepare and maintain a written policy statement to assure
   9-66  implementation of a program of equal employment opportunity under
   9-67  which all personnel transactions are made without regard to race,
   9-68  color, disability, sex, religion, age, or national origin.  The
   9-69  policy statement must include:
   9-70              (1)  personnel policies that comply with Chapter 21,
   10-1  Labor Code, including policies relating to recruitment, evaluation,
   10-2  selection, appointment, training, and promotion of personnel;
   10-3              (2)  a comprehensive analysis of the office workforce
   10-4  that meets federal and state guidelines;
   10-5              (3)  procedures by which a determination can be made
   10-6  about the extent of underuse in the office workforce of all persons
   10-7  for whom federal or state guidelines encourage a more equitable
   10-8  balance; and
   10-9              (4)  reasonable methods to appropriately address the
  10-10  underuse.
  10-11        (d)  A policy statement prepared under Subsection (c) of this
  10-12  section must cover an annual period, be updated at least annually
  10-13  and reviewed by the Commission on Human Rights for compliance with
  10-14  Subsection (c)(1) of this section, and be filed with the governor's
  10-15  office.  The governor's office shall deliver a biennial report to
  10-16  the legislature based on the information received under this
  10-17  subsection.  The report may be made separately or as a part of
  10-18  other biennial reports made to the legislature.
  10-19        (e)  The office shall provide to its employees, as often as
  10-20  necessary, information regarding their qualification for office or
  10-21  employment under this Act and their responsibilities under
  10-22  applicable laws relating to standards of conduct for state officers
  10-23  or employees.
  10-24        SECTION 1.21.  Section 1.054, Public Utility Regulatory Act
  10-25  of 1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
  10-26  Regular Session, 1995, is amended to read as follows:
  10-27        Sec. 1.054.  POWERS AND DUTIES.  (a)  The Office of Public
  10-28  Utility Counsel:
  10-29              (1)  shall assess the impact of utility rate changes
  10-30  and other regulatory actions on residential consumers in the State
  10-31  of Texas and shall be an advocate in its own name of positions most
  10-32  advantageous to a substantial number of such consumers as
  10-33  determined by the counsellor;
  10-34              (2)  may appear or intervene as a matter of right as a
  10-35  party or otherwise on behalf of residential consumers, as a class,
  10-36  in all proceedings before the commission;
  10-37              (3)  may appear or intervene as a matter of right as a
  10-38  party or otherwise on behalf of small commercial consumers, as a
  10-39  class, in all proceedings where it is deemed by the counsellor that
  10-40  small commercial consumers are in need of representation;
  10-41              (4)  may initiate or intervene as a matter of right or
  10-42  otherwise appear in any judicial proceedings involving or arising
  10-43  out of any action taken by an administrative agency in a proceeding
  10-44  in which the counsellor was authorized to appear;
  10-45              (5)  may have access as any party, other than staff, to
  10-46  all records gathered by the commission under the authority of
  10-47  Subsection (a) of Section 1.203 of this Act;
  10-48              (6)  may obtain discovery of any nonprivileged matter
  10-49  which is relevant to the subject matter involved in any proceeding
  10-50  or petition before the commission;
  10-51              (7)  may represent individual residential and small
  10-52  commercial consumers with respect to their disputed complaints
  10-53  concerning utility services unresolved before the commission; and
  10-54              (8)  may recommend legislation to the legislature which
  10-55  in its judgment would positively affect the interests of
  10-56  residential and small commercial consumers.
  10-57        (b)  Nothing in this section shall be construed as in any way
  10-58  limiting the authority of the commission to represent residential
  10-59  or small commercial consumers.
  10-60        (c)  The appearance of the counsellor in any proceeding in no
  10-61  way precludes the appearance of other parties on behalf of
  10-62  residential ratepayers or small commercial consumers.  The
  10-63  counsellor may not be grouped with any other parties.
  10-64        SECTION 1.22.  Section 1.101, Public Utility Regulatory Act
  10-65  of 1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
  10-66  Regular Session, 1995, is amended to read as follows:
  10-67        Sec. 1.101.  GENERAL POWER; RULES; HEARINGS; AUDITS.
  10-68  (a)  The commission has the general power to regulate and supervise
  10-69  the business of every public utility within its jurisdiction and to
  10-70  do all things, whether specifically designated in this Act or
   11-1  implied herein, necessary and convenient to the exercise of this
   11-2  power and jurisdiction.
   11-3        (b)  The commission shall make and enforce rules reasonably
   11-4  required in the exercise of its powers and jurisdiction, including
   11-5  rules governing practice and procedure before the commission and,
   11-6  as applicable, practice and procedure before the utility division
   11-7  of the State Office of Administrative Hearings.  The commission
   11-8  shall adopt rules authorizing an administrative law judge to:
   11-9              (1)  limit the amount of time that a party may have to
  11-10  present its case;
  11-11              (2)  limit the number of requests for information that
  11-12  a party may make in a contested case;
  11-13              (3)  require a party to a contested case to identify
  11-14  contested issues and facts before the hearing begins and to limit
  11-15  cross-examination to only those issues and facts and to any new
  11-16  issues that may arise as a result of the discovery process; or
  11-17              (4)  group parties, other than the office, that have
  11-18  the same position on an issue to facilitate cross-examination on
  11-19  that issue, provided that each party in a group is entitled to
  11-20  present that party's witnesses for cross-examination during the
  11-21  hearing.
  11-22        (c)  Rules adopted under Subsection (b) of this section must
  11-23  ensure that all parties receive due process.
  11-24        (d)  The commission may call and hold hearings, administer
  11-25  oaths, receive evidence at hearings, issue subpoenas to compel the
  11-26  attendance of witnesses and the production of papers and documents,
  11-27  and make findings of fact and decisions with respect to
  11-28  administering the provisions of this Act or the rules, orders, or
  11-29  other actions of the commission.
  11-30        (e)  Hearings in contested cases not conducted by one or more
  11-31  commissioners shall be conducted by the utility division of the
  11-32  State Office of Administrative Hearings.  The <(d)  Notwithstanding
  11-33  any other provision of this Act or other law, in proceedings other
  11-34  than those involving major rate changes, the> commission may
  11-35  delegate to the utility division of the State Office of
  11-36  Administrative Hearings <an administrative law judge or hearings
  11-37  examiner> the authority to make a final decision and to issue
  11-38  findings of fact, conclusions of law, and other necessary orders in
  11-39  a proceeding in which there is no contested issue of fact or law.
  11-40  The commission by rule shall define the procedures by which it
  11-41  delegates final decision-making authority authorized by this
  11-42  section.  For review purposes the final decision of the
  11-43  administrative law judge <or hearings examiner> has the same effect
  11-44  as a final decision of the commission unless a commissioner
  11-45  requests formal review of the decision.
  11-46        SECTION 1.23.  Subsection (b), Section 1.102, Public Utility
  11-47  Regulatory Act of 1995, as enacted by S.B. No. 319, Acts of the
  11-48  74th Legislature, Regular Session, 1995, is amended to read as
  11-49  follows:
  11-50        (b)  The commission may audit each utility under the
  11-51  jurisdiction of the commission as frequently as needed<, but shall
  11-52  audit each utility at least once every 10 years>.  Six months after
  11-53  any audit, the utility shall report to the commission on the status
  11-54  of the implementation of the recommendations of the audit and shall
  11-55  file subsequent reports at such times as the commission deems
  11-56  appropriate.
  11-57        SECTION 1.24.  Subtitle D, Title I, Public Utility Regulatory
  11-58  Act of 1995, as enacted by S.B. No. 319, Acts of the 74th
  11-59  Legislature, Regular Session, 1995, is amended by adding Section
  11-60  1.104 to read as follows:
  11-61        Sec. 1.104.  SETTLEMENTS.  (a)  The commission by rule shall
  11-62  adopt procedures governing the use of settlements to resolve
  11-63  contested cases.
  11-64        (b)  The rules shall ensure that:
  11-65              (1)  each party retains the right to:
  11-66                    (A)  have a full hearing before the commission on
  11-67  issues that remain in dispute; and
  11-68                    (B)  judicial review of issues that remain in
  11-69  dispute;
  11-70              (2)  an issue of fact raised by a nonsettling party
   12-1  cannot be waived by a settlement or stipulation of the other
   12-2  parties; and
   12-3              (3)  the nonsettling party may use the issue of fact
   12-4  raised by that party as the basis for judicial review.
   12-5        SECTION 1.25.  Section 1.202, Public Utility Regulatory Act
   12-6  of 1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
   12-7  Regular Session, 1995, is amended to read as follows:
   12-8        Sec. 1.202.  POWERS OF COMMISSION.  (a)  The commission shall
   12-9  have the power to:
  12-10              (1)  require that public utilities report to it such
  12-11  information relating to themselves and affiliated interests both
  12-12  within and without the State of Texas as it may consider useful in
  12-13  the administration of this Act;
  12-14              (2)  establish forms for all reports;
  12-15              (3)  determine the time for reports and the frequency
  12-16  with which any reports are to be made;
  12-17              (4)  require that any reports be made under oath;
  12-18              (5)  require that a copy of any contract or arrangement
  12-19  between any public utility and any affiliated interest be filed
  12-20  with it.  It may require any such contract or arrangement not in
  12-21  writing to be reduced to writing and filed with it;
  12-22              (6)  require that a copy of any report filed with any
  12-23  federal agency or any governmental agency or body of any other
  12-24  state be filed with it; and
  12-25              (7)  require that a copy of annual reports showing all
  12-26  payments of compensation (other than salary or wages subject to the
  12-27  withholding of federal income tax) to residents of Texas, or with
  12-28  respect to legal, administrative, or legislative matters in Texas,
  12-29  or for representation before the Texas Legislature or any
  12-30  governmental agency or body be filed with it.
  12-31        (b)  <The railroad commission shall have the power to review
  12-32  and approve, for purposes of the Outer Continental Shelf Lands Act
  12-33  Amendments of 1978  and any other federal authorities, applications
  12-34  by gas utilities for the purchase of natural gas from producing
  12-35  affiliates.>
  12-36        <(c)>  On the request of the governing body of any
  12-37  municipality, the commission may provide sufficient staff members
  12-38  to advise and consult with such municipality on any pending matter.
  12-39        SECTION 1.26.  Subsection (b), Section 1.251, Public Utility
  12-40  Regulatory Act of 1995, as enacted by S.B. No. 319, Acts of the
  12-41  74th Legislature, Regular Session, 1995, is amended to read as
  12-42  follows:
  12-43        (b)  All transactions involving the sale of 50 percent or
  12-44  more of the stock of a public utility shall also be reported to the
  12-45  commission within a reasonable time.  On the filing of a report
  12-46  with the commission, the commission shall investigate the same with
  12-47  or without public hearing to determine whether the action is
  12-48  consistent with the public interest.  In reaching its
  12-49  determination, the commission shall take into consideration the
  12-50  reasonable value of the property, facilities, or securities to be
  12-51  acquired, disposed of, merged, transferred, or consolidated and
  12-52  whether such a transaction will adversely affect the health or
  12-53  safety of customers or employees, result in the transfer of jobs of
  12-54  Texas citizens to workers domiciled outside the State of Texas, or
  12-55  result in the decline of service, that the public utility will
  12-56  receive consideration equal to the reasonable value of the assets
  12-57  when it sells, leases, or transfers assets, and that the
  12-58  transaction is consistent with the public interest.
  12-59        SECTION 1.27.  Section 1.271, Public Utility Regulatory Act
  12-60  of 1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
  12-61  Regular Session, 1995, is amended to read as follows:
  12-62        Sec. 1.271.  JURISDICTION OVER AFFILIATED INTERESTS.  The
  12-63  commission shall have jurisdiction over affiliated interests having
  12-64  transactions with public utilities under the jurisdiction of the
  12-65  commission to the extent of access to all accounts and records of
  12-66  such affiliated interests relating to such transactions, including
  12-67  but in no way limited to accounts and records of joint or general
  12-68  expenses, any portion of which may be applicable to such
  12-69  transactions.  Any accounts or records obtained by the commission
  12-70  related to sales of electrical energy at wholesale by an affiliated
   13-1  interest to the public utility shall be confidential and not
   13-2  subject to disclosure under Chapter 552, Government Code.
   13-3        SECTION 1.28.  Subtitle I, Title I, Public Utility Regulatory
   13-4  Act of 1995, as enacted by S.B. No. 319, Acts of the 74th
   13-5  Legislature, Regular Session, 1995, is amended by adding Section
   13-6  1.3215 to read as follows:
   13-7        Sec. 1.3215.  ADMINISTRATIVE PENALTY.  (a)  The commission
   13-8  may impose an administrative penalty against a person regulated
   13-9  under this Act who violates this Act or a rule or order adopted
  13-10  under this Act.
  13-11        (b)  The penalty for a violation may be in an amount not to
  13-12  exceed $5,000.  Each day a violation continues or occurs is a
  13-13  separate violation for purposes of imposing a penalty.
  13-14        (c)  The amount of the penalty shall be based on:
  13-15              (1)  the seriousness of the violation, including the
  13-16  nature, circumstances, extent, and gravity of any prohibited acts,
  13-17  and the hazard or potential hazard created to the health, safety,
  13-18  or economic welfare of the public;
  13-19              (2)  the economic harm to property or the environment
  13-20  caused by the violation;
  13-21              (3)  the history of previous violations;
  13-22              (4)  the amount necessary to deter future violations;
  13-23              (5)  efforts to correct the violation; and
  13-24              (6)  any other matter that justice may require.
  13-25        (d)  If the executive director determines that a violation
  13-26  has occurred, the executive director may issue to the commission a
  13-27  report that states the facts on which the determination is based
  13-28  and the director's recommendation on the imposition of a penalty,
  13-29  including a recommendation on the amount of the penalty.
  13-30        (e)  Within 14 days after the date the report is issued, the
  13-31  executive director shall give written notice of the report to the
  13-32  person.  The notice may be given by certified mail.  The notice
  13-33  must include a brief summary of the alleged violation and a
  13-34  statement of the amount of the recommended penalty and must inform
  13-35  the person that the person has a right to a hearing on the
  13-36  occurrence of the violation, the amount of the penalty, or both the
  13-37  occurrence of the violation and the amount of the penalty.
  13-38        (f)  Within 20 days after the date the person receives the
  13-39  notice, the person in writing may accept the determination and
  13-40  recommended penalty of the executive director or may make a written
  13-41  request for a hearing on the occurrence of the violation, the
  13-42  amount of the penalty, or both the occurrence of the violation and
  13-43  the amount of the penalty.
  13-44        (g)  If the person accepts the determination and recommended
  13-45  penalty of the executive director, the commission by order shall
  13-46  approve the determination and impose the recommended penalty.
  13-47        (h)  If the person requests a hearing or fails to respond
  13-48  timely to the notice, the executive director shall set a hearing
  13-49  and give notice of the hearing to the person.  The hearing shall be
  13-50  held by an administrative law judge of the State Office of
  13-51  Administrative Hearings.   The administrative law judge shall make
  13-52  findings of fact and conclusions of law and promptly issue to the
  13-53  commission a proposal for a decision about the occurrence of the
  13-54  violation and the amount of a proposed penalty.  Based on the
  13-55  findings of fact, conclusions of law, and proposal for a decision,
  13-56  the commission by order may find that a violation has occurred and
  13-57  impose a penalty or may find that no violation occurred.
  13-58        (i)  The notice of the commission's order given to the person
  13-59  under Chapter 2001, Government Code, must include a statement of
  13-60  the right of the person to judicial review of the order.
  13-61        (j)  Within 30 days after the date the commission's order is
  13-62  final as provided by Section 2001.144, Government Code, the person
  13-63  shall:
  13-64              (1)  pay the amount of the penalty;
  13-65              (2)  pay the amount of the penalty and file a petition
  13-66  for judicial review contesting the occurrence of the violation, the
  13-67  amount of the penalty, or both the occurrence of the violation and
  13-68  the amount of the penalty; or
  13-69              (3)  without paying the amount of the penalty, file a
  13-70  petition for judicial review contesting the occurrence of the
   14-1  violation, the amount of the penalty, or both the occurrence of the
   14-2  violation and the amount of the penalty.
   14-3        (k)  Within the 30-day period, a person who acts under
   14-4  Subsection (j)(3) of this section may:
   14-5              (1)  stay enforcement of the penalty by:
   14-6                    (A)  paying the amount of the penalty to the
   14-7  court for placement in an escrow account; or
   14-8                    (B)  giving to the court a supersedeas bond that
   14-9  is approved by the court for the amount of the penalty and that is
  14-10  effective until all judicial review of the commission's order is
  14-11  final; or
  14-12              (2)  request the court to stay enforcement of the
  14-13  penalty by:
  14-14                    (A)  filing with the court a sworn affidavit of
  14-15  the person stating that the person is financially unable to pay the
  14-16  amount of the penalty and is financially unable to give the
  14-17  supersedeas bond; and
  14-18                    (B)  giving a copy of the affidavit to the
  14-19  executive director by certified mail.
  14-20        (l)  The executive director, on receipt of a copy of an
  14-21  affidavit under Subsection (k)(2) of this section, may file with
  14-22  the court, within five days after the date the copy is received, a
  14-23  contest to the affidavit.  The court shall hold a hearing on the
  14-24  facts alleged in the affidavit as soon as practicable and shall
  14-25  stay the enforcement of the penalty on finding that the alleged
  14-26  facts are true.  The person who files an affidavit has the burden
  14-27  of proving that the person is financially unable to pay the amount
  14-28  of the penalty and to give a supersedeas bond.
  14-29        (m)  If the person does not pay the amount of the penalty and
  14-30  the enforcement of the penalty is not stayed, the executive
  14-31  director may refer the matter to the attorney general for
  14-32  collection of the amount of the penalty.
  14-33        (n)  Judicial review of the order of the commission:
  14-34              (1)  is instituted by filing a petition as provided by
  14-35  Subchapter G, Chapter 2001, Government Code; and
  14-36              (2)  is under the substantial evidence rule.
  14-37        (o)  If the court sustains the occurrence of the violation,
  14-38  the court may uphold or reduce the amount of the penalty and order
  14-39  the person to pay the full or reduced amount of the penalty.  If
  14-40  the court does not sustain the occurrence of the violation, the
  14-41  court shall order that no penalty is owed.
  14-42        (p)  When the judgment of the court becomes final, the court
  14-43  shall proceed under this subsection.  If the person paid the amount
  14-44  of the penalty and if that amount is reduced or is not upheld by
  14-45  the court, the court shall order that the appropriate amount plus
  14-46  accrued interest be remitted to the person.  The rate of the
  14-47  interest is the rate charged on loans to depository institutions by
  14-48  the New York Federal Reserve Bank, and the interest shall be paid
  14-49  for the period beginning on the date the penalty was paid and
  14-50  ending on the date the penalty is remitted.  If the person gave a
  14-51  supersedeas bond and if the amount of the penalty is not upheld by
  14-52  the court, the court shall order the release of the bond.  If the
  14-53  person gave a supersedeas bond and if the amount of the penalty is
  14-54  reduced, the court shall order the release of the bond after the
  14-55  person pays the amount.
  14-56        (q)  A penalty collected under this section shall be remitted
  14-57  to the comptroller for deposit in the general revenue fund.
  14-58        (r)  All proceedings under this section are subject to
  14-59  Chapter 2001, Government Code.
  14-60        (s)  The executive director may delegate to a person that the
  14-61  executive director designates any power or duty given the executive
  14-62  director by this section.
  14-63        SECTION 1.29.  Subsection (b), Section 1.351, Public Utility
  14-64  Regulatory Act of 1995, as enacted by S.B. No. 319, Acts of the
  14-65  74th Legislature, Regular Session, 1995, is amended to read as
  14-66  follows:
  14-67        (b)  The legislature may <commission shall, subject to the
  14-68  approval of the legislature,> adjust this assessment to provide a
  14-69  level of income sufficient to fund the commission and the office of
  14-70  public utility counsel.
   15-1        SECTION 1.30.  Section 1.354, Public Utility Regulatory Act
   15-2  of 1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
   15-3  Regular Session, 1995, is amended to read as follows:
   15-4        Sec. 1.354.  COLLECTION AND PAYMENT INTO GENERAL REVENUE
   15-5  FUND.  (a)  All fees, penalties, and interest paid under the
   15-6  provisions of Sections 1.351, <and> 1.352, and 1.353 of this Act
   15-7  shall be collected by the comptroller of public accounts and paid
   15-8  into the general revenue fund.  <The commission shall notify the
   15-9  comptroller of public accounts of any adjustment of the assessment
  15-10  imposed in Section 1.351 when made.>
  15-11        (b)  All money paid to the commission or to the office under
  15-12  this Act is subject to Subchapter F, Chapter 404, Government Code.
  15-13        SECTION 1.31.  Section 1.355, Public Utility Regulatory Act
  15-14  of 1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
  15-15  Regular Session, 1995, is amended to read as follows:
  15-16        Sec. 1.355.  GRANTS OF FEDERAL FUNDS.  (a)  The commission
  15-17  may apply to any appropriate agency or officer of the United States
  15-18  to receive and spend federal funds which it may obtain from grants
  15-19  or other similar forms of financial assistance.  Nothing in this
  15-20  section shall inhibit the commission's ability to contract with or
  15-21  otherwise receive assistance from any state, local, or other
  15-22  authorized source of funds.
  15-23        (b)  Sections 403.094 and 403.095, Government Code, do not
  15-24  apply to the special account established under this section.
  15-25  <APPROVAL OF BUDGET.  The budget of the commission shall be subject
  15-26  to legislative approval as part of the appropriations act.>
  15-27        SECTION 1.32.  Subsections (a) and (b), Section 1.401, Public
  15-28  Utility Regulatory Act of 1995, as enacted by S.B. No. 319, Acts of
  15-29  the 74th Legislature, Regular Session, 1995, are amended to read as
  15-30  follows:
  15-31        (a)  Any affected person may complain to the regulatory
  15-32  authority in writing setting forth any act or thing done or omitted
  15-33  to be done by any public utility in violation or claimed violation
  15-34  of any law which the regulatory authority has jurisdiction to
  15-35  administer or of any order, ordinance, rule, or regulation of the
  15-36  regulatory authority.  The commission shall keep <an> information
  15-37  <file> about each complaint filed with the commission <relating to
  15-38  a utility>.  The commission shall retain the information <file> for
  15-39  a reasonable period.  The information shall include:
  15-40              (1)  the date the complaint is received;
  15-41              (2)  the name of the complainant;
  15-42              (3)  the subject matter of the complaint;
  15-43              (4)  a record of all persons contacted in relation to
  15-44  the complaint;
  15-45              (5)  a summary of the results of the review or
  15-46  investigation of the complaint; and
  15-47              (6)  for complaints for which the commission took no
  15-48  action, an explanation of the reason the complaint was closed
  15-49  without action.
  15-50        (b)  The commission shall keep a file about each <If a>
  15-51  written complaint <is> filed with the commission.  The commission
  15-52  shall provide to the person filing the complaint and to the persons
  15-53  or entities complained about the commission's policies and
  15-54  procedures pertaining to complaint investigation and resolution.
  15-55  The <relating to a utility, the> commission, at least <as
  15-56  frequently as> quarterly and until final disposition of the
  15-57  complaint, shall notify the person filing <parties to> the
  15-58  complaint and each person or entity complained about of the status
  15-59  of the complaint unless the notice would jeopardize an undercover
  15-60  investigation.
  15-61        SECTION 1.33.  Subtitle K, Title I, Public Utility Regulatory
  15-62  Act of 1995, as enacted by S.B. No. 319, Acts of the 74th
  15-63  Legislature, Regular Session, 1995, is amended by adding Section
  15-64  1.407 to read as follows:
  15-65        Sec. 1.407.  HISTORICALLY UNDERUTILIZED BUSINESSES.  (a)  The
  15-66  commission by rule shall require each utility to make a good faith
  15-67  effort to overcome the underuse of historically underutilized
  15-68  businesses as shown for private industry by the disparity study
  15-69  conducted under Chapter 684 (H.B. No. 2626), Acts of the 73rd
  15-70  Legislature, 1993.  The rules must take into account different
   16-1  disparity ratios shown for different race and sex groups.
   16-2        (b)  The commission shall conduct further research and
   16-3  analysis to adjust the results of the disparity study as necessary
   16-4  to account for specific underuse of historically underutilized
   16-5  businesses by the utility industry.
   16-6        (c)  The rules adopted under this section must require each
   16-7  utility to prepare and submit to the commission a strategic plan
   16-8  for use of historically underutilized businesses.
   16-9        (d)  In this section:
  16-10              (1)  "Historically underutilized business" means a
  16-11  business entity at least 51 percent of which is owned by minority
  16-12  group members, or in the case of a corporation, at least 51 percent
  16-13  of the shares of which are owned, managed, and controlled by
  16-14  minority group members.
  16-15              (2)  "Minority group members" include:
  16-16                    (A)  African Americans;
  16-17                    (B)  American Indians;
  16-18                    (C)  Asian Americans;
  16-19                    (D)  Mexican Americans and other Americans of
  16-20  Hispanic origin; and
  16-21                    (E)  women.
  16-22        SECTION 1.34.  Subchapter C, Chapter 2003, Government Code,
  16-23  is amended by adding Section 2003.047 to read as follows:
  16-24        Sec. 2003.047.  UTILITY DIVISION.  (a)  The office shall
  16-25  establish a utility division to perform the contested case hearings
  16-26  for the Public Utility Commission of Texas as prescribed by the
  16-27  Public Utility Regulatory Act of 1995 and other applicable law.
  16-28        (b)  The utility division shall conduct hearings relating to
  16-29  contested cases before the commission, other than a hearing
  16-30  conducted by one or more commissioners.  The commission by rule may
  16-31  delegate the responsibility to hear any other matter before the
  16-32  commission if consistent with the duties and responsibilities of
  16-33  the division.
  16-34        (c)  Only an administrative law judge in the utility division
  16-35  may conduct a hearing on behalf of the commission.  An
  16-36  administrative law judge in the utility division may conduct
  16-37  hearings for other state agencies as time allows.  The office may
  16-38  transfer an administrative law judge into the division on a
  16-39  temporary or permanent basis and may contract with qualified
  16-40  individuals to serve as temporary administrative law judges as
  16-41  necessary.
  16-42        (d)  To be eligible to preside at a hearing, an
  16-43  administrative law judge, regardless of temporary or permanent
  16-44  status, must be licensed to practice law in this state and have not
  16-45  less than five years of general experience or three years of
  16-46  experience in utility regulatory law.
  16-47        (e)  At the time the office receives jurisdiction of a
  16-48  proceeding, the commission shall provide to the administrative law
  16-49  judge a list of issues or areas that must be addressed.  In
  16-50  addition, the commission may identify and provide to the
  16-51  administrative law judge at any time additional issues or areas
  16-52  that must be addressed.
  16-53        (f)  The office and the commission shall jointly adopt rules
  16-54  providing for certification to the commission of an issue that
  16-55  involves an ultimate finding of compliance with or satisfaction of
  16-56  a statutory standard the determination of which is committed to the
  16-57  discretion or judgment of the commission by law.  The rules must
  16-58  address, at a minimum, the issues that are appropriate for
  16-59  certification and the procedure to be used in certifying the issue.
  16-60  Each agency shall publish the jointly adopted rules.
  16-61        (g)  Notwithstanding Section 2001.058, the commission may
  16-62  change a finding of fact or conclusion of law made by the
  16-63  administrative law judge or vacate or modify an order issued by the
  16-64  administrative law judge only if the commission:
  16-65              (1)  determines that the administrative law judge:
  16-66                    (A)  did not properly apply or interpret
  16-67  applicable law, commission rules or policies, or prior
  16-68  administrative decisions; or
  16-69                    (B)  issued a finding of fact that is not
  16-70  supported by a preponderance of the evidence; or
   17-1              (2)  determines that a commission policy or a prior
   17-2  administrative decision on which the administrative law judge
   17-3  relied is incorrect or should be changed.
   17-4        (h)  The commission shall state in writing the specific
   17-5  reason and legal basis for its determination under Subsection (g).
   17-6        (i)  An administrative law judge, on the judge's own motion
   17-7  or on motion of a party and after notice and an opportunity for a
   17-8  hearing, may impose appropriate sanctions as provided by Subsection
   17-9  (j) against a party or its representative for:
  17-10              (1)  filing a motion or pleading that is groundless and
  17-11  brought:
  17-12                    (A)  in bad faith;
  17-13                    (B)  for the purpose of harassment; or
  17-14                    (C)  for any other improper purpose, such as to
  17-15  cause unnecessary delay or needless increase in the cost of the
  17-16  proceeding;
  17-17              (2)  abuse of the discovery process in seeking, making,
  17-18  or resisting discovery; or
  17-19              (3)  failure to obey an order of the administrative law
  17-20  judge or the commission.
  17-21        (j)  A sanction imposed under Subsection (i) may include, as
  17-22  appropriate and justified, issuance of an order:
  17-23              (1)  disallowing further discovery of any kind or of a
  17-24  particular kind by the offending party;
  17-25              (2)  charging all or any part of the expenses of
  17-26  discovery against the offending party or its representative;
  17-27              (3)  holding that designated facts be deemed admitted
  17-28  for purposes of the proceeding;
  17-29              (4)  refusing to allow the offending party to support
  17-30  or oppose a designated claim or defense or prohibiting the party
  17-31  from introducing designated matters in evidence;
  17-32              (5)  disallowing in whole or in part requests for
  17-33  relief by the offending party and excluding evidence in support of
  17-34  such requests;
  17-35              (6)  punishing the offending party or its
  17-36  representative for contempt to the same extent as a district court;
  17-37              (7)  requiring the offending party or its
  17-38  representative to pay, at the time ordered by the administrative
  17-39  law judge, the reasonable expenses, including attorney's fees,
  17-40  incurred by other parties because of the sanctionable behavior; and
  17-41              (8)  striking pleadings or testimony, or both, in whole
  17-42  or in part, or staying further proceedings until the order is
  17-43  obeyed.
  17-44        (k)  Hearings conducted for the commission by the office
  17-45  shall be held in hearing rooms provided by the commission.  The
  17-46  commission shall also provide the utility division access to its
  17-47  computer systems, databases, and library resources.
  17-48        (l)  The office shall charge the commission a fixed annual
  17-49  fee rather than an hourly rate for services rendered by the utility
  17-50  division to the commission.  The office and the commission shall
  17-51  negotiate the amount of the fixed fee biennially, subject to the
  17-52  approval of the governor, to coincide with the commission's
  17-53  legislative appropriations request.
  17-54        SECTION 1.35.  (a)  A task force is established to administer
  17-55  the transfer of the hearings division from the Public Utility
  17-56  Commission of Texas to the State Office of Administrative Hearings.
  17-57  The task force is composed of:
  17-58              (1)  the governor or the governor's designee;
  17-59              (2)  the Legislative Budget Board or the board's
  17-60  designee;
  17-61              (3)  the chairman of the Public Utility Commission of
  17-62  Texas;
  17-63              (4)  the public utility counsel; and
  17-64              (5)  the chief administrative law judge of the State
  17-65  Office of Administrative Hearings.
  17-66        (b)  The governor or the governor's designee is the presiding
  17-67  officer of the task force.
  17-68        (c)  The task force shall:
  17-69              (1)  determine the personnel, equipment, data,
  17-70  facilities, and other items that will be transferred under this Act
   18-1  and the schedule for the transfers; and
   18-2              (2)  mediate and resolve disputes between the
   18-3  respective agencies relating to a transfer.
   18-4        (d)  After the transfers have been completed, the task force
   18-5  shall prepare a written report detailing the specifics of the
   18-6  transfers and shall submit the report to the governor and the
   18-7  legislature.
   18-8        (e)  In determining a transfer under this Act, the task force
   18-9  shall ensure that the transfer does not adversely affect a
  18-10  proceeding before the Public Utility Commission of Texas or the
  18-11  rights of the parties to the proceeding.
  18-12        (f)  This section takes effect immediately.
  18-13        SECTION 1.36.  (a)  On September 1, 1995, all personnel,
  18-14  including hearings examiners and administrative law judges,
  18-15  equipment, data, facilities, and other items of the hearings
  18-16  division of the Public Utility Commission of Texas, other than the
  18-17  personnel, equipment, data, facilities, and other items of the
  18-18  central records office, are transferred to the utility division of
  18-19  the State Office of Administrative Hearings.  Until September 1,
  18-20  1996, an employee transferred to the utility division may be
  18-21  terminated or subject to salary reduction only for cause and only
  18-22  in relation to poor performance or unacceptable conduct.  A
  18-23  hearings examiner transferred to the State Office of Administrative
  18-24  Hearings becomes an administrative law judge on the date of
  18-25  transfer.
  18-26        (b)  A hearings examiner or administrative law judge
  18-27  transferred from the Public Utility Commission of Texas to the
  18-28  State Office of Administrative Hearings shall continue to hear any
  18-29  case assigned to the person as if the transfer had not occurred.
  18-30        (c)  The changes in law made by this Act that relate to the
  18-31  procedures governing a hearing before the utility division of the
  18-32  State Office of Administrative Hearings apply only to a case that
  18-33  is filed on or after September 1, 1995.  In addition, the
  18-34  procedures prescribed by the provisions amended by this Act shall
  18-35  continue to be used in a hearing as those provisions existed on
  18-36  August 31, 1995.  The former law is continued in effect for those
  18-37  purposes.
  18-38        (d)  The Public Utility Commission of Texas is not required
  18-39  by this Act or amendments made by this Act to adopt new rules
  18-40  governing practice and procedure before the Public Utility
  18-41  Commission of Texas or the utility division of the State Office of
  18-42  Administrative Hearings.  The rules in effect on the effective date
  18-43  of this Act remain in effect until amended or repealed as required
  18-44  by law.  Any rules adopted after the effective date of this Act
  18-45  governing practice and procedure before the utility division of the
  18-46  State Office of Administrative Hearings must be adopted jointly by
  18-47  that office and the commission.
  18-48        SECTION 1.37.  Section 1.3215, Public Utility Regulatory Act
  18-49  of 1995, as added by this Act, applies only to a violation
  18-50  committed on or after the effective date of this Act.  A violation
  18-51  committed before the effective date of this Act is governed by the
  18-52  law in effect when the violation occurred, and that law is
  18-53  continued in effect for that purpose.
  18-54        SECTION 1.38.  Section 1.104, Public Utility Regulatory Act
  18-55  of 1995, as added by this Act, applies only to a proceeding for
  18-56  which a final order has not been issued before the effective date
  18-57  of this Act and does not apply to an electric utility merger
  18-58  proceeding filed before January 1, 1995, in which a final order has
  18-59  not been issued.  Except as otherwise provided by this section, on
  18-60  or after the effective date of this Act, the Public Utility
  18-61  Commission of Texas may not approve a settlement unless the
  18-62  settlement has been reached in accordance with rules adopted under
  18-63  Section 1.104, Public Utility Regulatory Act of 1995, as added by
  18-64  this Act.
  18-65        SECTION 1.39.  The changes in law made by this Act relating
  18-66  to the requirements for membership on the Public Utility Commission
  18-67  of Texas, to the requirements for service as public utility
  18-68  counsel, or to employment as executive director or general counsel
  18-69  of the commission apply only to a person appointed or hired, as
  18-70  appropriate, on or after the effective date of this Act and do not
   19-1  affect the entitlement of a member serving on the commission on
   19-2  August 31, 1995, to continue to hold office for the remainder of
   19-3  the term for which the person was appointed or the ability of a
   19-4  person serving as public utility counsel, executive director, or
   19-5  general counsel on August 31, 1995, to continue to hold that
   19-6  position.
   19-7                               ARTICLE 2
   19-8        SECTION 2.01.  Subtitle A, Title II, Public Utility
   19-9  Regulatory Act of 1995, as enacted by S.B. No. 319, Acts of the
  19-10  74th Legislature, Regular Session, 1995, is amended by amending
  19-11  Section 2.001 and adding Sections 2.0011 and 2.0012 to read as
  19-12  follows:
  19-13        Sec. 2.001.  LEGISLATIVE POLICY AND PURPOSE.  This title is
  19-14  enacted to protect the public interest inherent in the rates and
  19-15  services of public utilities.  The legislature finds that public
  19-16  utilities are by definition monopolies in many of the services they
  19-17  provide and in many of the areas they serve, and that therefore the
  19-18  normal forces of competition that operate to regulate prices in a
  19-19  free enterprise society do not always operate, and that therefore
  19-20  utility rates, operations, and services are regulated by public
  19-21  agencies where competition does not operate, with the objective
  19-22  that this regulation shall operate as a substitute for competition.
  19-23  The purpose of this title is to establish a comprehensive
  19-24  regulatory system that is adequate to the task of regulating public
  19-25  utilities as defined in this title, to assure rates, operations,
  19-26  and services that are just and reasonable to consumers and to the
  19-27  utilities.  Retail electric service maintains the attributes that
  19-28  make regulation of monopolies appropriate.  To promote the
  19-29  development of a competitive wholesale electric market the public
  19-30  interest warrants open transmission access for wholesale
  19-31  transactions and allowing participation in the generation market by
  19-32  certain nonutilities.
  19-33        Sec. 2.0011.  DEFINITIONS.  In this title:
  19-34              (1)  "Public<, "public> utility" or "utility" means any
  19-35  person, corporation, river authority, cooperative corporation, or
  19-36  any combination thereof, other than a municipal corporation, or
  19-37  their lessees, trustees, and receivers, now or hereafter owning or
  19-38  operating for compensation in this state equipment or facilities
  19-39  for producing, generating, transmitting, distributing, selling, or
  19-40  furnishing electricity in this state (hereinafter "electric
  19-41  utility"); provided, however, that this definition may not be
  19-42  construed to apply to or include a qualifying facility <small power
  19-43  producer or qualifying cogenerator, as defined in Sections 3(17)(D)
  19-44  and 3(18)(C) of the Federal Power Act, as amended (16 U.S.C.
  19-45  Sections 796(17)(D) and 796(18)(C))>.  The term does not include an
  19-46  exempt wholesale generator, a power marketer, or a corporation as
  19-47  prescribed by Section 2.0012 of this Act, or any person or
  19-48  corporation not otherwise a public utility that:
  19-49                    (A) <(1)>  furnishes the services or commodity
  19-50  described in this section only to itself, its employees, or its
  19-51  tenants as an incident of such employee service or tenancy, when
  19-52  such service or commodity is not resold to or used by others;
  19-53                    (B) <(2)>  owns or operates in this state
  19-54  equipment or facilities for producing, generating, transmitting,
  19-55  distributing, selling, or furnishing electric energy to an electric
  19-56  utility, if the equipment or facilities are used primarily for the
  19-57  production and generation of electric energy for consumption by the
  19-58  person or corporation; or
  19-59                    (C) <(3)>  owns or operates in this state a
  19-60  recreational vehicle park that provides metered electric service in
  19-61  accordance with Article 1446d-2, Revised Statutes, provided that a
  19-62  recreational vehicle park owner is considered a public utility if
  19-63  the owner fails to comply with Article 1446d-2, Revised Statutes,
  19-64  with regard to the metered sale of electricity at the recreational
  19-65  vehicle park.
  19-66              (2)  "Exempt wholesale generator" means a person that
  19-67  is engaged directly, or indirectly through one or more affiliates,
  19-68  exclusively in the business of owning, operating, or both owning
  19-69  and operating all or part of one or more facilities for the
  19-70  generation of electric energy and selling electric energy at
   20-1  wholesale and that:
   20-2                    (A)  does not own facilities for the transmission
   20-3  of electricity, other than essential interconnecting transmission
   20-4  facilities necessary to effect a sale of electric energy at
   20-5  wholesale; and
   20-6                    (B)  has applied to the Federal Energy Regulatory
   20-7  Commission for a determination under Section 32, Public Utility
   20-8  Holding Company Act (15 U.S.C. Section 79z-5a), or has registered
   20-9  as an exempt wholesale generator as required by this Act.
  20-10              (3)  "Power marketer" means a person that:
  20-11                    (A)  becomes owner of electric energy in this
  20-12  state for the purpose of buying and selling the electric energy at
  20-13  wholesale;
  20-14                    (B)  does not own generation, transmission, or
  20-15  distribution facilities in this state;
  20-16                    (C)  does not have a certificated service area;
  20-17  and
  20-18                    (D)  has been granted authority by the Federal
  20-19  Energy Regulatory Commission to sell electric energy at
  20-20  market-based rates or has registered as a power marketer under this
  20-21  Act.
  20-22              (4)  "Qualifying cogenerator" and "qualifying small
  20-23  power producer" have the meanings assigned by Sections 3(18)(C) and
  20-24  3(17)(D), Federal Power Act (16 U.S.C. Sections 796(18)(C) and
  20-25  796(17)(D)).
  20-26              (5)  "Qualifying facility" means a qualifying
  20-27  cogenerator or qualifying small power producer.
  20-28              (6)  "Transmission service" includes construction or
  20-29  enlargement of facilities, transmission over distribution
  20-30  facilities, control area services, scheduling resources, regulation
  20-31  service, providing operating reserves, reactive power support,
  20-32  voltage control, and any other associated electrical services
  20-33  deemed appropriate by the commission.
  20-34        Sec. 2.0012.  CERTAIN RIVER AUTHORITIES.
  20-35  (a)  Notwithstanding any other provision of this Act to the
  20-36  contrary, the commission shall not have the authority to regulate
  20-37  directly or indirectly the revenue requirements, rates, fuel costs,
  20-38  fuel charges, or fuel acquisitions that are related to the
  20-39  generation and sale of electricity at wholesale and not to ultimate
  20-40  consumers by a river authority operating one or more steam
  20-41  generating plants.  Subject to the provisions of this section, the
  20-42  term "public utility," "retail public utility," or "utility" shall
  20-43  not include a corporation authorized by Chapter 245, Acts of the
  20-44  67th Legislature, Regular Session, 1981 (Article 717p, Vernon's
  20-45  Texas Civil Statutes), and acting on behalf of the river authority
  20-46  to the extent that the corporation sells electricity exclusively at
  20-47  wholesale and not to ultimate consumers.
  20-48        (b)  This section shall constitute full authority for any
  20-49  river authority operating one or more steam generating plants to
  20-50  acquire, finance, construct, rebuild, repower, and use new and
  20-51  existing power plants, equipment, transmission lines, and other
  20-52  assets, for the sale of electricity exclusively at wholesale and
  20-53  not at retail to any purchaser within San Saba, Llano, Burnet,
  20-54  Travis, Bastrop, Blanco, Colorado, and Fayette counties and any
  20-55  purchaser within the area served by the river authority on
  20-56  January 1, 1975.
  20-57        (c)  This section shall constitute full authority for a
  20-58  corporation described in Subsection (a) of this section to acquire,
  20-59  finance, construct, rebuild, repower, operate, or sell facilities
  20-60  directly related to the generation of electricity and sell the
  20-61  output of such facilities, to the extent that such corporation
  20-62  sells such electricity to any purchaser at any location in this
  20-63  state exclusively at wholesale, and not to ultimate consumers,
  20-64  notwithstanding any provisions to the contrary in the river
  20-65  authority's enabling legislation or Chapter 245, Acts of the 67th
  20-66  Legislature, Regular Session, 1981 (Article 717p, Vernon's Texas
  20-67  Civil Statutes), provided that nothing in this section shall
  20-68  preclude the corporation from purchasing transmission and related
  20-69  services from such river authority.  Except as provided in this
  20-70  section, the development, financing, ownership, and operation of
   21-1  such facilities by such corporation shall be subject to the
   21-2  provisions of all applicable laws other than this Act, and the
   21-3  property, gross receipts, and income of such corporation acting on
   21-4  behalf of a river authority pursuant to this section shall be
   21-5  subject to, and such corporation shall pay, taxes and assessments
   21-6  of the federal government or of this state or of any municipal
   21-7  corporation, county, or other political subdivision or taxing
   21-8  district of this state on the same basis as an exempt wholesale
   21-9  generator.  No proceeds from the sale of bonds or other
  21-10  obligations, the interest on which is exempt from taxation, issued
  21-11  by the corporation or river authority, other than as may be
  21-12  available to investor-owned utilities or exempt wholesale
  21-13  generators, shall be used, or shall have been used, to finance the
  21-14  construction or acquisition of or rebuilding or repowering of any
  21-15  facilities for the generation of electricity by the corporation.
  21-16        (d)  This section shall not authorize the river authority to
  21-17  acquire, install, construct, make additions to, or operate steam
  21-18  generating plants whose aggregate capacity is greater than 5,000
  21-19  megawatts to serve purchasers within the area served by the river
  21-20  authority on January 1, 1975.  In addition, any river authority
  21-21  subject to this section and any corporation acting on behalf of
  21-22  such river authority may provide retail service only to those
  21-23  retail customers served by the river authority or corporation
  21-24  acting on behalf of the river authority on September 1, 1995.
  21-25        (e)  Nothing in this section shall otherwise limit the powers
  21-26  granted a river authority in its enabling legislation and other
  21-27  applicable law.
  21-28        SECTION 2.02.  Subtitle A, Title II, Public Utility
  21-29  Regulatory Act of 1995, as enacted by S.B. No. 319, Acts of the
  21-30  74th Legislature, Regular Session, 1995, is amended by adding
  21-31  Section 2.003 to read as follows:
  21-32        Sec. 2.003.  SCOPE OF COMPETITION.  Before January 15 of each
  21-33  odd-numbered year, the commission shall report to the legislature
  21-34  on the scope of competition in electric markets and the impact of
  21-35  competition and industry restructuring on customers in both
  21-36  competitive and noncompetitive markets.  The report shall include
  21-37  an assessment of the impact of competition on the rates and
  21-38  availability of electric services for residential and small
  21-39  commercial customers and a summary of commission actions over the
  21-40  preceding two years that reflect changes in the scope of
  21-41  competition in regulated electric markets.  The report shall also
  21-42  include recommendations to the legislature for further legislation
  21-43  that the commission finds appropriate to promote the public
  21-44  interest in the context of a partially competitive electric market.
  21-45        SECTION 2.03.  Section 2.051, Public Utility Regulatory Act
  21-46  of 1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
  21-47  Regular Session, 1995, is amended to read as follows:
  21-48        Sec. 2.051.  INTEGRATED RESOURCE PLANNING.  (a)  The
  21-49  commission by rule shall develop an integrated resource planning
  21-50  process to provide reliable energy service at the lowest reasonable
  21-51  cost.  In determining the lowest reasonable cost of an electric
  21-52  utility's plan, the commission shall consider in addition to direct
  21-53  costs the following:
  21-54              (1)  the effect on the rates and bills of various types
  21-55  of customers;
  21-56              (2)  minimization of the risks of future fuel costs and
  21-57  regulations;
  21-58              (3)  the appropriateness and reliability of the mix of
  21-59  resources; and
  21-60              (4)  the costs of compliance with the environmental
  21-61  protection requirements of all applicable state and federal laws,
  21-62  rules, and orders.
  21-63        (b)  The commission by rule shall adopt and periodically
  21-64  update a statewide integrated resource plan that includes the
  21-65  commission's long-term resource planning goals.  The commission
  21-66  shall send a report on the plan to the governor when it adopts or
  21-67  revises the plan and notify each public utility of the approval of
  21-68  the statewide plan.  The commission shall make the report available
  21-69  to the public.
  21-70        (c)  The report on the statewide plan shall include:
   22-1              (1)  historical data for electric consumption statewide
   22-2  and by utility;
   22-3              (2)  historical data for electric generation by utility
   22-4  and by type of capacity, including alternative energy sources;
   22-5              (3)  an inventory of generation capacity statewide and
   22-6  by utility;
   22-7              (4)  quantitative data on demand-side management
   22-8  programs to the extent the commission determines necessary;
   22-9              (5)  each generating utility's forecast without
  22-10  adjustment;
  22-11              (6)  the commission's long-term resource planning goals
  22-12  included in the plan;
  22-13              (7)  a projection of the need for electric services;
  22-14              (8)  a description of the approved individual
  22-15  integrated resource plans of public utilities; and
  22-16              (9)  an assessment of transmission planning being
  22-17  performed by utilities within this state.
  22-18        (d)  In prescribing the requirements under this section,
  22-19  including reporting requirements, the commission shall consider and
  22-20  recognize the differences in capabilities of small and large
  22-21  utilities.
  22-22        (e)  Generating public utilities as well as non-generating
  22-23  public utilities planning to construct generating resources shall
  22-24  submit to the commission a preliminary integrated resource plan.
  22-25  Preliminary integrated resource plans shall be submitted every
  22-26  three years and cover a 10-year period.  The commission by rule:
  22-27              (1)  shall:
  22-28                    (A)  prescribe a staggered schedule for the
  22-29  submission of plans by utilities;
  22-30                    (B)  prescribe the form and manner in which a
  22-31  plan must be submitted;
  22-32                    (C)  adopt filing requirements and schedules; and
  22-33                    (D)  prescribe the methods by which a utility may
  22-34  recover supply-side and demand-side costs; and
  22-35              (2)  may:
  22-36                    (A)  define the scope and nature of public
  22-37  participation in the development of the plan; and
  22-38                    (B)  establish the general guidelines to be used
  22-39  by utilities in evaluating and selecting or rejecting resources,
  22-40  including procedures governing the solicitation process.
  22-41        (f)  A preliminary plan submitted under this section must
  22-42  include:
  22-43              (1)  the utility's forecast of future demands;
  22-44              (2)  an estimate of the energy savings and demand
  22-45  reduction the utility can achieve during the 10-year period  by use
  22-46  of demand-side management resources and the range of possible costs
  22-47  for those resources;
  22-48              (3)  if additional supply-side resources are needed to
  22-49  meet future demand, an estimate of:
  22-50                    (A)  the amount and operational characteristics
  22-51  of the additional capacity needed;
  22-52                    (B)  the types of viable supply-side resources
  22-53  for meeting that need; and
  22-54                    (C)  the range of probable costs of those
  22-55  resources;
  22-56              (4)  if necessary,  proposed requests for proposals for
  22-57  demand-side or supply-side resources, or both;
  22-58              (5)  the specific criteria the utility will use to
  22-59  evaluate and select or reject those resources, which criteria may
  22-60  deviate from the general guidelines on a showing of good cause;
  22-61              (6)  the methods by which the utility intends to
  22-62  monitor those resources after selection;
  22-63              (7)  the method by which the utility intends to
  22-64  allocate costs;
  22-65              (8)  any proposed incentive factors; and
  22-66              (9)  any other information the commission requires.
  22-67        (g)  Every three years, a municipally owned utility shall
  22-68  submit to the commission a report containing all of the information
  22-69  required in a preliminary integrated resource plan under Subsection
  22-70  (f) of this section, but shall not otherwise be subject to the
   23-1  requirements of this section.
   23-2        (h)  After a utility files its preliminary plan, the
   23-3  commission on its own motion or on the motion of the utility or of
   23-4  an affected person shall convene a public hearing on the adequacy
   23-5  and merits of the preliminary plan.  At the hearing, any interested
   23-6  person may intervene, present evidence, and cross-examine witnesses
   23-7  regarding the contents and adequacy of the preliminary plan.
   23-8  Discovery is limited to an issue relating to the development of the
   23-9  preliminary plan, a fact issue included in the preliminary plan,
  23-10  and other issues the commission is required to decide relating to
  23-11  the preliminary plan.   A commission hearing is not required for a
  23-12  preliminary plan filed by a river authority or generating electric
  23-13  cooperative that does not intend to build a new generating plant or
  23-14  for a preliminary plan filed by a municipally owned public utility.
  23-15        (i)  After the hearing, the commission shall determine
  23-16  whether:
  23-17              (1)  the utility's preliminary plan is based on
  23-18  substantially accurate data and an adequate method of forecasting;
  23-19              (2)  the utility's preliminary plan identifies and
  23-20  takes into account any present and projected reductions in the
  23-21  demand for energy that may result from cost-effective measures to
  23-22  improve conservation and energy efficiency in various customer
  23-23  classes of the area being served;
  23-24              (3)  if additional supply-side resources are needed to
  23-25  meet future demand, the utility's preliminary plan adequately
  23-26  demonstrates:
  23-27                    (A)  the amount and operational characteristics
  23-28  of the additional capacity needed;
  23-29                    (B)  the types of viable supply-side resources
  23-30  for meeting that need; and
  23-31                    (C)  the range of probable costs of those
  23-32  resources;
  23-33              (4)  the utility's preliminary plan demonstrates the
  23-34  opportunities for appropriate persons to participate in the
  23-35  development of the preliminary plan;
  23-36              (5)  the specific criteria the utility will use to
  23-37  evaluate and select or reject resources are reasonable and
  23-38  consistent with the guidelines of the integrated resource planning
  23-39  process;
  23-40              (6)  the cost allocation method proposed by the utility
  23-41  is reasonable; and
  23-42              (7)  any incentive factors are appropriate and, if so,
  23-43  the levels of such incentive factors.
  23-44        (j)  Not later than the 180th day after the date the utility
  23-45  files the preliminary plan, the commission shall issue an interim
  23-46  order on the preliminary plan.  The commission shall approve the
  23-47  preliminary plan, modify the preliminary plan, or, if necessary,
  23-48  remand the preliminary plan for additional proceedings.  The
  23-49  180-day period may be extended for a period not to exceed 30 days
  23-50  for extenuating circumstances encountered in the development and
  23-51  processing of an initial plan, if the extenuating circumstances are
  23-52  fully explained and agreed on by the commissioners.
  23-53        (k)  On approval of the preliminary plan, the utility shall
  23-54  conduct solicitations for demand-side and supply-side resources, as
  23-55  prescribed in the preliminary plan.  In addition to soliciting
  23-56  resources from unaffiliated third parties, the utility may:
  23-57              (1)  prepare and submit a bid of a new utility
  23-58  demand-side management program as prescribed by Subsection (m) of
  23-59  this section;
  23-60              (2)  receive bids from one or more affiliates; and
  23-61              (3)  request a certificate of convenience and necessity
  23-62  for a new rate-based generating plant.
  23-63        (l)  Each bidder, including the utility and its affiliates,
  23-64  shall submit two copies of its bid to the commission.  The
  23-65  commission shall ensure that the utility has access to all bids at
  23-66  the same time.  The commission shall keep a copy of each bid
  23-67  submitted by the utility or an affiliate to determine whether the
  23-68  utility complied with the criteria established for conduct of the
  23-69  solicitation.  A bid submitted under this subsection or retained
  23-70  under this subsection is confidential and is not subject to
   24-1  disclosure under Chapter 552, Government Code.
   24-2        (m)  If a utility wants to use a proposed demand-side
   24-3  management program to meet a need identified in the preliminary
   24-4  plan, the utility must prepare a bid reflecting that resource.  A
   24-5  bid prepared by the utility under this subsection must comply with
   24-6  the solicitation, evaluation, selection, and rejection criteria
   24-7  specified in the preliminary plan.  The utility may not give
   24-8  preferential treatment or consideration to a bid prepared under
   24-9  this subsection.
  24-10        (n)  The utility shall evaluate each bid submitted, including
  24-11  an affiliate bid, in accordance with the criteria specified in the
  24-12  preliminary plan and shall negotiate necessary contracts.  The
  24-13  utility is not required to accept a bid and may reject any or all
  24-14  bids in accordance with the selection and rejection criteria
  24-15  specified in the preliminary plan.  If the results of the
  24-16  solicitations and contract negotiations do not meet the supply-side
  24-17  needs identified in the preliminary plan, the utility may apply for
  24-18  a certificate of convenience and necessity for a utility-owned
  24-19  resource addition notwithstanding the fact a solicitation was
  24-20  conducted and the addition was not included in the approved
  24-21  preliminary plan.
  24-22        (o)  After conducting the solicitations and negotiating the
  24-23  contracts, the utility shall submit to the commission a proposed
  24-24  final integrated resource plan.  The proposed final plan must
  24-25  include:
  24-26              (1)  the results of the solicitations;
  24-27              (2)  the contracts for resources;
  24-28              (3)  the terms and conditions under which the utility
  24-29  will provide resources to meet a need identified in the preliminary
  24-30  plan, if the utility accepts a bid submitted under Subsection (m)
  24-31  of this section; and
  24-32              (4)  an application for a certificate of convenience
  24-33  and necessity, if necessary.
  24-34        (p)  The commission shall, on request by any affected person
  24-35  and within 90 days after the date a utility files its final
  24-36  integrated resource plan under this section, convene a public
  24-37  hearing on the reasonableness and cost-effectiveness of the
  24-38  proposed final plan.  At the hearing, any interested person may
  24-39  intervene, present evidence, and cross-examine witnesses regarding
  24-40  the reasonableness and cost-effectiveness of the proposed final
  24-41  plan.  Parties will not be allowed to litigate or conduct discovery
  24-42  on issues that were litigated or could have been litigated in
  24-43  connection with the filing of the utility's preliminary plan.  To
  24-44  the extent permitted by federal law, the commission may issue a
  24-45  written order for access to the books, accounts, memoranda,
  24-46  contracts, or records of any exempt wholesale generator or power
  24-47  marketer selling energy at wholesale to a utility, if the
  24-48  examination is required for the effective discharge of the
  24-49  commission's regulatory responsibilities under this Act, except
  24-50  that if the commission issues such an order, the books, accounts,
  24-51  memoranda, contracts, and records obtained by the commission are
  24-52  confidential and not subject to disclosure under Chapter 552,
  24-53  Government Code.
  24-54        (q)  After the hearing, the commission shall determine
  24-55  whether:
  24-56              (1)  the utility's proposed final plan was developed in
  24-57  accordance with the preliminary plan and commission rules;
  24-58              (2)  the resource solicitations, evaluations,
  24-59  selections, and rejections were conducted in accordance with the
  24-60  criteria included in the preliminary plan;
  24-61              (3)  the utility's proposed final plan is
  24-62  cost-effective;
  24-63              (4)  the commission should certify the contracts and
  24-64  any utility bid submitted under Subsection (m) of this section that
  24-65  resulted from the solicitations; and
  24-66              (5)  the commission should grant a requested
  24-67  certificate of convenience and necessity for a utility-owned
  24-68  resource addition.
  24-69        (r)(1)  In determining whether to certify a supply-side or
  24-70  demand-side contract that results from the solicitations, the
   25-1  commission shall consider the reliability, financial condition, and
   25-2  safety of that resource contract and whether the solicitation,
   25-3  evaluation, and selection of that resource contract was conducted
   25-4  in accordance with the criteria included in the preliminary plan.
   25-5  The commission shall not certify contracts for new purchases of
   25-6  power by a utility unless the utility has determined, after giving
   25-7  consideration to consistently applied regional or national
   25-8  reliability standards, guidelines, or criteria, that the contract
   25-9  would not unreasonably impair the continued reliability of electric
  25-10  systems affected by the purchase, and the purchase can reasonably
  25-11  be expected to produce benefits to customers of the purchasing
  25-12  utility.  Commission certification of a resource contract does not
  25-13  negate the necessity of the resource to comply with all applicable
  25-14  environmental and siting regulations.  In addition, if the contract
  25-15  is with a utility affiliate, the commission shall determine whether
  25-16  the utility treated and considered the affiliate's bid in the same
  25-17  manner it treated and considered other bids intended to meet the
  25-18  same resource needs and shall further determine, in connection with
  25-19  such purchase, whether:
  25-20                    (A)  the transaction will benefit consumers;
  25-21                    (B)  the transaction violates any state law,
  25-22  including least cost planning;
  25-23                    (C)  the transaction provides the utility
  25-24  affiliate any unfair competitive advantage by virtue of its
  25-25  affiliation or association with the utility;
  25-26                    (D)  the transaction is in the public interest;
  25-27  and
  25-28                    (E)  the commission has sufficient regulatory
  25-29  authority, resources, and access to the books and records of the
  25-30  utility and its affiliate to make these determinations.
  25-31              (2)  In setting a public utility's rates for a period
  25-32  during which a certified contract is effective, the regulatory
  25-33  authority shall consider payments made under the contract to be
  25-34  reasonable and necessary operating expenses of the public utility.
  25-35  The regulatory authority may provide for monthly recovery of the
  25-36  approved costs of the contract as those costs are incurred,
  25-37  including the allowed mark-up determined by the commission.
  25-38        (s)  In determining whether to grant a requested certificate
  25-39  of convenience and necessity, the commission shall consider the
  25-40  effect of the granting of a certificate on the recipient of the
  25-41  certificate and on any public utility of the same kind already
  25-42  serving the proximate area.  The commission shall also consider
  25-43  other factors such as community values, recreational and park
  25-44  areas, historical and aesthetic values, environmental integrity,
  25-45  and the probable improvement of service or lowering of cost to
  25-46  consumers in that area if the certificate is granted.  The
  25-47  commission shall grant the certificate as part of the approval of
  25-48  the final plan if it finds that:
  25-49              (1)  the proposed addition is necessary under the final
  25-50  plan;
  25-51              (2)  the proposed addition is the best and most
  25-52  economical choice of technology for that service area; and
  25-53              (3)  cost-effective conservation and other
  25-54  cost-effective alternative energy sources cannot reasonably meet
  25-55  the need.
  25-56        (t)  Not later than the 180th day after the date the utility
  25-57  files the proposed final plan, the commission shall issue a final
  25-58  order on the plan.  The commission shall approve the proposed final
  25-59  plan, modify the proposed final plan, or, if necessary, remand the
  25-60  proposed final plan for additional proceedings.
  25-61        (u)  The commission shall adopt rules allowing a utility to
  25-62  add, consistent with the utility's last approved integrated
  25-63  resource planning goals, new or incremental resources outside the
  25-64  solicitation process, including resources listed in Subsection (x)
  25-65  of this section.
  25-66        (v)  In addition to its other authority and responsibility
  25-67  under this section, the commission shall establish rules and
  25-68  guidelines that will promote the development of renewable energy
  25-69  technologies consistent with the guidelines of the integrated
  25-70  resource planning process.
   26-1        (w)  In carrying out its duties related to the integrated
   26-2  resource planning process, the commission may:
   26-3              (1)  allow timely recovery of reasonable costs of
   26-4  conservation, load management, and purchased power, notwithstanding
   26-5  Section 2.212(g)(1) of this Act;
   26-6              (2)  authorize additional incentives for conservation,
   26-7  load management, purchased power, and renewable resources;
   26-8              (3)  require a utility to provide transmission service,
   26-9  exclusively for the purposes of transmitting wholesale power, to
  26-10  another utility or any other entity authorized to generate and sell
  26-11  electricity or to a power marketer; and
  26-12              (4)  review the state's transmission system to
  26-13  determine and make recommendations to public utilities on the need
  26-14  to build new power lines, upgrade power lines, and make other
  26-15  improvements and additions as necessary, and who should pay the
  26-16  direct and indirect cost of these improvements if made, review the
  26-17  actions of the public utilities in light of those recommendations,
  26-18  and take those actions into account in fixing a reasonable return
  26-19  on invested capital under Section 2.203(b) of this Act.
  26-20        (x)  Consistent with the utility's last approved integrated
  26-21  resource planning goals, if any, the utility, including a
  26-22  nongenerating utility, may add new or incremental resources outside
  26-23  the solicitation process such as:
  26-24              (1)  contract renegotiation for existing capacity from
  26-25  an electric cooperative or nonaffiliated power generating
  26-26  facilities;
  26-27              (2)  electric cooperative or nonaffiliated demand-side
  26-28  management programs or renewable resources;
  26-29              (3)  capacity purchases with terms of two years or less
  26-30  from an electric cooperative or nonaffiliated power suppliers or
  26-31  capacity purchases necessary to satisfy unanticipated emergency
  26-32  conditions;
  26-33              (4)  the exercise of an option in a purchased power
  26-34  contract with an electric cooperative or nonaffiliated supplier;
  26-35  and
  26-36              (5)  renewable distributed resources, located at or
  26-37  near the point of consumption, if they are less costly than
  26-38  transmission extensions or upgrades.
  26-39        (y)  The addition of new or incremental resources by a
  26-40  utility under Subsection (x) of this section does not require an
  26-41  amendment to the utility's integrated resource plan.
  26-42        (z)(1)  If a qualifying facility submits a bid under this
  26-43  section, regardless of whether that bid is accepted or rejected,
  26-44  and only with respect to the capacity need for which the bid has
  26-45  been submitted, the submission of the bid:
  26-46                    (A)  constitutes a waiver by the qualifying
  26-47  facility of any rights it may otherwise have under law to sell
  26-48  capacity to the utility;
  26-49                    (B)  represents the qualifying facility's
  26-50  agreement to negotiate a rate for purchase of capacity and terms
  26-51  and conditions relating to any purchase of capacity by the utility
  26-52  that differ from the rate or terms and conditions that would
  26-53  otherwise be required by 18 CFR Chapter I, Subchapter K, Part 292,
  26-54  Subpart C; and
  26-55                    (C)  constitutes a waiver by the qualifying
  26-56  facility of its right to the rate, terms, or conditions for
  26-57  purchases of capacity by the utility that might otherwise be
  26-58  required by that subpart.
  26-59              (2)  For the purpose of determining a utility's avoided
  26-60  capacity costs under 18 CFR Chapter I, Subchapter K, Part 292,
  26-61  Subpart C, on submitting a preliminary integrated resource plan to
  26-62  the commission under Section 2.051 of this Act, the utility's
  26-63  avoided capacity costs shall be deemed to be $0 and shall remain
  26-64  $0, with respect to any capacity needs shown in such preliminary
  26-65  integrated resource plan or final integrated resource plan that are
  26-66  to be satisfied by resources approved in the utility's final
  26-67  integrated resource plan.
  26-68              (3)  Nothing in this subsection shall affect the
  26-69  validity of any contract entered into between a qualifying facility
  26-70  and an electric utility for any purchase.
   27-1        (aa)  In this section, "utility" includes a river authority
   27-2  subject to Section 2.0012 of this Act with respect to the area
   27-3  served by the river authority on January 1, 1975.
   27-4        (bb)  Nongenerating utilities not planning to construct
   27-5  generating resources are not required to submit an integrated
   27-6  resource plan to the commission.  If such a utility seeks to
   27-7  purchase more than 25 percent of its peak demand or more than 70
   27-8  megawatts from a wholesale power supplier other than its existing
   27-9  power supplier, the utility shall conduct a solicitation for
  27-10  resources.  However, no solicitation is required for purchases from
  27-11  an existing power supplier, and new or incremental resources may be
  27-12  added outside the solicitation process as provided in Subsection
  27-13  (x) of this section.  If requested by such a utility, the
  27-14  commission may review the reasonableness of any contract for
  27-15  resources resulting from the solicitation.  On a finding by the
  27-16  commission that such a contract is reasonable, the commission shall
  27-17  certify the contract.  The commission shall make its determination
  27-18  within 90 days after the date the proposed contract is submitted.
  27-19  Nothing in this subsection is intended to alter or amend existing
  27-20  wholesale power supply contracts.
  27-21        (cc)  To the extent that the commission authorizes utilities
  27-22  to recover costs of demand-side management programs, conservation,
  27-23  load management, or purchased power through various cost recovery
  27-24  factors, the commission shall make a final reconciliation of the
  27-25  costs recovered through those cost recovery factors.  The
  27-26  commission shall adopt rules regarding when the reconciliations
  27-27  will occur for each of the cost recovery factors, what type of
  27-28  information utilities need to file in support of the
  27-29  reconciliation, and other matters necessary to perform the
  27-30  reconciliation.  The reconciliation shall (1) review the
  27-31  reasonableness of the utility's administration of the contracts and
  27-32  programs whose costs are being reconciled and (2) reconcile the
  27-33  revenue collected under each cost recovery factor and the costs
  27-34  that the utility incurred on purchased power, demand-side
  27-35  management, conservation, or load management during the
  27-36  reconciliation period.  <ELECTRICAL FORECAST.  (a)  The commission
  27-37  shall develop a long-term statewide electrical energy forecast
  27-38  which shall be sent to the governor biennially.  The forecast will
  27-39  include an assessment of how alternative energy sources,
  27-40  conservation, and load management will meet the state's electricity
  27-41  needs.>
  27-42        <(b)  Every generating electric utility in the state shall
  27-43  prepare and transmit to the commission every two years a report
  27-44  specifying at least a 10-year forecast for assessments of load and
  27-45  resources for its service area.  The report shall include a list of
  27-46  facilities which will be required to supply electric power during
  27-47  the forecast periods.  The report shall be in a form prescribed by
  27-48  the commission.  The report shall include:>
  27-49              <(1)  a tabulation of estimated peak load, resources,
  27-50  and reserve margins for each year during the forecast or assessment
  27-51  period;>
  27-52              <(2)  a list of existing electric generating plants in
  27-53  service with a description of planned and potential generating
  27-54  capacity at existing sites;>
  27-55              <(3)  a list of facilities which will be needed to
  27-56  serve additional electrical requirements identified in the
  27-57  forecasts or assessments, the general location of such facilities,
  27-58  and the anticipated types of fuel to be utilized in the proposed
  27-59  facilities, including an estimation of shutdown costs and disposal
  27-60  of spent fuel for nuclear power plants;>
  27-61              <(4)  a description of additional system capacity which
  27-62  might be achieved through, among other things, improvements in:>
  27-63                    <(A)  generating or transmission efficiency;>
  27-64                    <(B)  importation of power;>
  27-65                    <(C)  interstate or interregional pooling;>
  27-66                    <(D)  other improvements in efficiencies of
  27-67  operation; and>
  27-68                    <(E)  conservation measures;>
  27-69              <(5)  an estimation of the mix and type of fuel
  27-70  resources for the forecast or assessment period;>
   28-1              <(6)  an annual load duration curve and a forecast of
   28-2  anticipated peak loads for the forecast or assessment period for
   28-3  the residential, commercial, industrial, and such other major
   28-4  demand sectors in the service area of the electric utility as the
   28-5  commission shall determine; and>
   28-6              <(7)  a description of projected population growth,
   28-7  urban development, industrial expansion, and other growth factors
   28-8  influencing increased demand for electric energy and the basis for
   28-9  such projections.>
  28-10        <(c)  The commission shall establish and every electric
  28-11  utility shall utilize a reporting methodology for preparation of
  28-12  the forecasts of future load and resources.>
  28-13        <(d)  The commission shall review and evaluate the electric
  28-14  utilities' forecast of load and resources and any public comment on
  28-15  population growth estimates prepared by the Bureau of Business
  28-16  Research, The University of Texas at Austin.>
  28-17        <(e)  Within 12 months after the receipt of the reports
  28-18  required by this section, the commission shall hold a public
  28-19  hearing and subsequently issue a final report to the governor and
  28-20  notify every electric utility of the commission's electric forecast
  28-21  for that utility.  The commission shall consider its electric
  28-22  forecast in all certification proceedings covering new generation
  28-23  plants.>
  28-24        SECTION 2.04.  Section 2.052, Public Utility Regulatory Act
  28-25  of 1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
  28-26  Regular Session, 1995, is amended to read as follows:
  28-27        Sec. 2.052.  ENCOURAGEMENT OF ECONOMICAL PRODUCTION.
  28-28  (a)  The commission shall make and enforce rules to encourage the
  28-29  economical production of electric energy by qualifying cogenerators
  28-30  and qualifying small power producers.
  28-31        (b)  A qualifying cogenerator or qualifying small power
  28-32  producer may sell electric energy in this state only at wholesale,
  28-33  except that a qualifying cogenerator may sell electric energy at
  28-34  retail to the sole purchaser of the cogenerator's thermal output.
  28-35        SECTION 2.05.  Subtitle B, Title II, Public Utility
  28-36  Regulatory Act of 1995, as enacted by S.B. No. 319, Acts of the
  28-37  74th Legislature, Regular Session, 1995, is amended by adding
  28-38  Section 2.053 to read as follows:
  28-39        Sec. 2.053.  EXEMPT WHOLESALE GENERATORS AND POWER MARKETERS.
  28-40  (a)  An exempt wholesale generator or power marketer may sell
  28-41  electric energy only at wholesale.
  28-42        (b)  The commission has the following jurisdiction over
  28-43  exempt wholesale generators and power marketers that sell electric
  28-44  energy in this state:
  28-45              (1)  to require registration as provided by Subsection
  28-46  (c) of this section; and
  28-47              (2)  to require the filing of reports the commission
  28-48  prescribes by rule.
  28-49        (c)  Each exempt wholesale generator and power marketer
  28-50  shall, within 30 days after the date it becomes subject to this
  28-51  section, register with the commission or provide proof that it has
  28-52  registered with the Federal Energy Regulatory Commission or been
  28-53  authorized by the Federal Energy Regulatory Commission to sell
  28-54  electric energy at market-based rates.  Registration may be
  28-55  accomplished by filing with the commission a description of the
  28-56  location of any facility used to provide service, the type of
  28-57  service provided, a copy of any information filed with the Federal
  28-58  Energy Regulatory Commission in connection with registration with
  28-59  that commission, and other information the commission prescribes by
  28-60  rule.
  28-61        SECTION 2.06.  Subtitle B, Title II, Public Utility
  28-62  Regulatory Act of 1995, as enacted by S.B. No. 319, Acts of the
  28-63  74th Legislature, Regular Session, 1995, is amended by adding
  28-64  Section 2.054 to read as follows:
  28-65        Sec. 2.054.  EXEMPT WHOLESALE GENERATOR AND POWER MARKETER
  28-66  AFFILIATES.  (a)  An affiliate of a public utility may be an exempt
  28-67  wholesale generator or power marketer and may sell electric energy
  28-68  to its affiliated public utility in accordance with Section 2.051
  28-69  of this Act and other provisions of law governing wholesale sales
  28-70  of electric energy.
   29-1        (b)  If a rate or charge for or in connection with the
   29-2  construction of a facility, or for electric energy produced by the
   29-3  construction of a facility, or for electric energy produced by a
   29-4  facility other than any portion of a rate or charge which
   29-5  represents recovery of the cost of a wholesale rate or charge was
   29-6  in effect as of the date of enactment of this section, the facility
   29-7  shall not be sold, transferred to an affiliate, or otherwise
   29-8  considered an eligible facility as defined by federal law.  The
   29-9  commission may, after notice and hearing, allow such facility to be
  29-10  sold, transferred to an affiliate, or become an eligible facility
  29-11  only if such sale or transfer will benefit ratepayers of the
  29-12  utility making the sale or transfer, is in the public interest, and
  29-13  otherwise complies with state law.
  29-14        SECTION 2.07.  Subtitle B, Title II, Public Utility
  29-15  Regulatory Act of 1995, as enacted by S.B. No. 319, Acts of the
  29-16  74th Legislature, Regular Session, 1995, is amended by adding
  29-17  Section 2.056 to read as follows:
  29-18        Sec. 2.056.  TRANSMISSION SERVICE.  (a)  The commission may
  29-19  require a utility, including a municipally owned utility, to
  29-20  provide transmission service at wholesale to another utility, a
  29-21  qualifying facility, an exempt wholesale generator, or a power
  29-22  marketer and may determine whether the terms and conditions for the
  29-23  transmission service are reasonable.  The commission may require
  29-24  transmission service at wholesale, including construction or
  29-25  enlargement of facilities, in a proceeding not related to approval
  29-26  of an integrated resource plan.  The commission may not issue a
  29-27  decision or rule relating to transmission service that is contrary
  29-28  to an applicable decision, rule, or policy statement of a federal
  29-29  regulatory agency having jurisdiction.
  29-30        (b)  The commission, with the advice and consent of the
  29-31  governor, shall appoint a five-person interstate interconnection
  29-32  committee to determine and recommend the most economical, reliable,
  29-33  and efficient means to synchronously interconnect, by the year
  29-34  2001, the alternating current electric facilities of electric
  29-35  utilities within the Electric Reliability Council of Texas
  29-36  reliability area to the alternating current electric facilities of
  29-37  utilities within the Southwest Power Pool reliability area.
  29-38        SECTION 2.08.  Subtitle B, Title II, Public Utility
  29-39  Regulatory Act of 1995, as enacted by S.B. No. 319, Acts of the
  29-40  74th Legislature, Regular Session, 1995, is amended by adding
  29-41  Section 2.057 to read as follows:
  29-42        Sec. 2.057.  WHOLESALE COMPETITION.  (a)  A public utility
  29-43  that owns or operates transmission facilities shall provide
  29-44  wholesale transmission service at rates, terms of access, and
  29-45  conditions that are comparable to the rates, terms of access, and
  29-46  conditions of the utility's use of its system.  The commission
  29-47  shall ensure that utilities provide nondiscriminatory access to
  29-48  transmission service for qualifying facilities, exempt wholesale
  29-49  generators, power marketers, and public utilities.  The commission
  29-50  shall adopt rules within 180 days of the effective date of this
  29-51  section relating to wholesale transmission service, rates, and
  29-52  access.  The rules shall be consistent with the standards in this
  29-53  section, shall not be contrary to federal law, including any
  29-54  applicable policy statement, decision, or rule of a federal
  29-55  regulatory agency, having jurisdiction and shall require
  29-56  transmission services that are not less than the transmission
  29-57  services the Federal Energy Regulatory Commission may require in
  29-58  similar circumstances.  All public utilities that own or operate
  29-59  transmission facilities shall file tariffs implementing such rules
  29-60  within 60 days after the commission has adopted transmission
  29-61  pricing and access rules pursuant to this section unless the terms
  29-62  and conditions for access and pricing are included in the tariff of
  29-63  another utility.  Such tariffs shall be filed with the appropriate
  29-64  state or federal regulatory agency having jurisdiction over the
  29-65  transmission service of the entity filing the tariff.
  29-66        (b)  The commission shall adopt rules relating to the
  29-67  registration and reporting requirements of qualifying facilities,
  29-68  exempt wholesale generators, and power marketers.
  29-69        (c)  The regulatory authority may not require a public
  29-70  utility to wheel or transmit electricity over that public utility's
   30-1  facilities from another entity to an ultimate consumer of
   30-2  electricity in the utility's certificated service area, including
   30-3  wheeling or transmitting electricity to another location of that
   30-4  other entity, if the entity is an ultimate consumer of electricity.
   30-5        (d)  To the extent a utility provides transmission of
   30-6  electric energy at the request of a third party, the commission
   30-7  shall ensure that the costs of the transmission are not borne by
   30-8  the utility's other customers by requiring the utility to recover
   30-9  from the entity for which the transmission is provided all
  30-10  reasonable costs incurred by the utility in providing transmission
  30-11  services necessary for the transaction.
  30-12        (e)  For the purposes of administering these rules, the
  30-13  commission may require that parties to a dispute over the prices,
  30-14  terms, and conditions of wholesale transmission service engage in a
  30-15  nonbinding alternative dispute resolution process before seeking a
  30-16  resolution of a dispute from the commission.
  30-17        (f)  The commission shall submit a report to the 75th
  30-18  Legislature on methods or procedures for quantifying the magnitude
  30-19  of stranded investment, procedures for allocating costs, and the
  30-20  acceptable methods of recovering stranded costs.
  30-21        (g)  Affiliates of public utilities, exempt wholesale
  30-22  generators, qualifying facilities, and all other providers of
  30-23  generation may compete for the business of selling power to a third
  30-24  party that is not an ultimate consumer of electricity.  In
  30-25  accordance with the applicable provisions of this Act, a public
  30-26  utility may purchase power from an affiliate.  A public utility may
  30-27  not grant undue preference to any person in connection with the
  30-28  utility's purchase or sale of electric energy at wholesale or other
  30-29  utility services.
  30-30        (h)  For the purposes of this section, the term "public
  30-31  utility" shall include municipally owned utilities.
  30-32        SECTION 2.09.  Subsection (a), Section 2.101, Public Utility
  30-33  Regulatory Act of 1995, as enacted by S.B. No. 319, Acts of the
  30-34  74th Legislature, Regular Session, 1995, is amended to read as
  30-35  follows:
  30-36        (a)  Subject to the limitations imposed by Sections 2.2011
  30-37  and 2.211 of <in> this Act, and for the purpose of regulating rates
  30-38  and services so that such rates may be fair, just, and reasonable,
  30-39  and the services adequate and efficient, the governing body of each
  30-40  municipality shall have exclusive original jurisdiction over all
  30-41  retail electric utility rates, operations, and services provided by
  30-42  an electric utility within its city or town limits.
  30-43        SECTION 2.10.  Section 2.105, Public Utility Regulatory Act
  30-44  of 1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
  30-45  Regular Session, 1995, is amended by adding Subsection (c) to read
  30-46  as follows:
  30-47        (c)  Not later than the 31st day before the date a utility
  30-48  files a statement of intent under Section 2.212(a) of this Act, the
  30-49  utility shall provide to each municipality having original
  30-50  jurisdiction notice of intent to file the statement.  Not later
  30-51  than the 30th day after the date a municipality receives notice of
  30-52  intent to file a statement, the municipality may request that the
  30-53  utility file with the municipality a statement of intent in
  30-54  accordance with Section 2.212(a) of this Act.  If requested, the
  30-55  utility shall file the statement of intent with the municipality at
  30-56  the same time the statement is filed with the commission.
  30-57        SECTION 2.11.  Subsection (a), Section 2.106, Public Utility
  30-58  Regulatory Act of 1995, as enacted by S.B. No. 319, Acts of the
  30-59  74th Legislature, Regular Session, 1995, is amended to read as
  30-60  follows:
  30-61        (a)  The governing body of any municipality participating in
  30-62  or conducting ratemaking proceedings and proceedings initiated
  30-63  pursuant to Section 2.051 of this Act shall have the right to
  30-64  select and engage rate consultants, accountants, auditors,
  30-65  attorneys, engineers, or any combination thereof to conduct
  30-66  investigations, present evidence, advise and represent the
  30-67  governing body, and assist with litigation in public utility
  30-68  ratemaking proceedings and proceedings initiated pursuant to
  30-69  Section 2.051 of this Act before the governing body, any regulatory
  30-70  authority, or in court.  The public utility engaged in such
   31-1  proceedings shall be required to reimburse the governing body for
   31-2  the reasonable costs of such services to the extent found
   31-3  reasonable by the applicable regulatory authority.
   31-4        SECTION 2.12.  Subtitle D, Title II, Public Utility
   31-5  Regulatory Act of 1995, as enacted by S.B. No. 319, Acts of the
   31-6  74th Legislature, Regular Session, 1995, is amended by adding
   31-7  Section 2.1511 to read as follows:
   31-8        Sec. 2.1511.  MARK-UP.  Any cost recovery factor established
   31-9  for recovery of purchased power costs may include the costs
  31-10  incurred by the utility for the purchase of capacity and energy,
  31-11  together with a mark-up added to the costs or other mechanism, as
  31-12  determined by the commission, to reasonably compensate the utility
  31-13  for financial risks, if any, to the utility associated with
  31-14  purchased power obligations and the value added by the utility in
  31-15  making the purchased power available to its customers.  The
  31-16  mark-ups and cost recovery factors, if allowed, may be those that
  31-17  are necessary to encourage the utility to include economical
  31-18  purchased power as part of its energy and capacity resource supply
  31-19  plan.
  31-20        SECTION 2.13.  Section 2.152, Public Utility Regulatory Act
  31-21  of 1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
  31-22  Regular Session, 1995, is amended by adding Subsection (e) to read
  31-23  as follows:
  31-24        (e)  Reasonable costs of participating in a proceeding under
  31-25  this Act may be allowed, not to exceed the amount approved by the
  31-26  regulatory authority.
  31-27        SECTION 2.14.  Subsection (b), Section 2.154, Public Utility
  31-28  Regulatory Act of 1995, as enacted by S.B. No. 319, Acts of the
  31-29  74th Legislature, Regular Session, 1995, is amended to read as
  31-30  follows:
  31-31        (b)  Every public utility shall file with, and as a part of
  31-32  such schedules, all rules and regulations relating to or affecting
  31-33  the rates, public utility service, product, or commodity furnished
  31-34  by such utility.  Prices being charged to individual customers for
  31-35  retail electric service shall be filed with the regulatory
  31-36  authority.  The regulatory authority shall consider any information
  31-37  concerning a price charged to an individual customer filed with it
  31-38  to be a trade secret and shall prevent disclosure of the
  31-39  information. This information is not subject to disclosure under
  31-40  Chapter 552, Government Code.
  31-41        SECTION 2.15.  Subtitle E, Title II, Public Utility
  31-42  Regulatory Act of 1995, as enacted by S.B. No. 319, Acts of the
  31-43  74th Legislature, Regular Session, 1995, is amended by adding
  31-44  Section 2.2011 to read as follows:
  31-45        Sec. 2.2011.  ELECTRIC COOPERATIVE EXEMPTION.  (a)  An
  31-46  electric cooperative corporation that provides retail electric
  31-47  utility service at distribution voltage is exempt from rate
  31-48  regulation if a majority of the members voting in an election on
  31-49  the deregulation of the electric cooperative vote to approve the
  31-50  exemption and the electric cooperative sends notice of the action
  31-51  to each applicable regulatory authority.  An electric cooperative
  31-52  that wants to hold an election under this section shall send a
  31-53  ballot by mail to each electric cooperative member.  The electric
  31-54  cooperative may include the ballot in a monthly billing.  The
  31-55  ballot shall provide for voting for or against rate deregulation of
  31-56  the electric cooperative.  If the proposition is approved, the
  31-57  electric cooperative shall send each ballot to the commission not
  31-58  later than the 10th day after the date the electric cooperative
  31-59  counts the ballots.  Based on the ballots received, the commission
  31-60  shall administratively certify that the electric cooperative is or
  31-61  is not deregulated for rate-making purposes.  An electric
  31-62  cooperative may not hold another election on the issue of being
  31-63  exempt from rate regulation before the first anniversary of the
  31-64  most recent election on the issue.  Subsections (b) through (n) of
  31-65  this section apply to an electric cooperative that has elected to
  31-66  be exempt from rate regulation.
  31-67        (b)  No regulatory authority shall fix and regulate the rates
  31-68  of an electric cooperative that has made an election under this
  31-69  section to be exempt from rate regulation except as provided for
  31-70  the commission in Subsections (g) and (i) of this section.
   32-1  Notwithstanding Section 2.101(a) of this Act, the commission has
   32-2  exclusive original jurisdiction in all of the electric
   32-3  cooperative's service area in a proceeding initiated under
   32-4  Subsection (g) or (i) of this section.
   32-5        (c)  An electric cooperative may change its rates by:
   32-6              (1)  adopting a resolution approving the proposed
   32-7  change;
   32-8              (2)  mailing notice of the proposed change to:
   32-9                    (A)  the commission;
  32-10                    (B)  each affected municipality;
  32-11                    (C)  each affected customer, which notice may be
  32-12  included in a monthly billing; and
  32-13                    (D)  each electric utility providing retail
  32-14  service in the electric cooperative's service area or in the
  32-15  adjoining service area; and
  32-16              (3)  making available at each of the electric
  32-17  cooperative's business offices for review by all interested persons
  32-18  a cost-of-service study that:
  32-19                    (A)  is not more than five years old at the time
  32-20  the electric cooperative adopts rates under this subsection; and
  32-21                    (B)  bears the certification of a professional
  32-22  engineer or certified public accountant.
  32-23        (d)(1)  The notice required by Subsection (c) of this section
  32-24  must contain the following information:
  32-25                    (A)  the increase or decrease in total operating
  32-26  revenues over actual test year revenues or over test year revenues
  32-27  adjusted to annualize the recovery of changes in the cost of
  32-28  purchased electricity, stated both as a dollar amount and as a
  32-29  percentage;
  32-30                    (B)  the classes of utility customers affected
  32-31  and the creation and application of any new rate classes;
  32-32                    (C)  the increase or decrease for each class
  32-33  stated as a percentage of actual test year revenues for the class
  32-34  or of test year revenues for the class adjusted to annualize the
  32-35  recovery of changes in the cost of purchased electricity;
  32-36                    (D)  a statement that the commission may review
  32-37  the rate change if the commission receives a petition within 60
  32-38  days in accordance with Subsection (g) of this section;
  32-39                    (E)  the address and telephone number of the
  32-40  commission;
  32-41                    (F)  a statement that a customer opposed to the
  32-42  rate change should notify the electric cooperative in writing of
  32-43  the person's opposition and should provide a return address; and
  32-44                    (G)  a statement that members may review a copy
  32-45  of any written opposition the electric cooperative receives.
  32-46              (2)  The electric cooperative may not be required to
  32-47  include additional information in the notice.
  32-48        (e)  The electric cooperative shall make available for review
  32-49  by a member of the cooperative at each of the electric
  32-50  cooperative's business offices a copy of any written opposition to
  32-51  the rate change the electric cooperative receives.
  32-52        (f)  The electric cooperative shall file tariffs with the
  32-53  commission.  If the electric cooperative complies with Subsection
  32-54  (c) of this section, the commission shall approve the tariffs not
  32-55  later than the 10th day after the 60-day period prescribed by
  32-56  Subsection (g) of this section expires, unless a review is required
  32-57  under Subsection (g) or (i) of this section.  If the tariffs are
  32-58  approved or if a review is not required and the commission fails to
  32-59  act during the period prescribed by this subsection, the change in
  32-60  rates takes effect on the 70th day after the date the electric
  32-61  cooperative first complies with all requirements of Subsection (c)
  32-62  of this section or on a later date determined by the electric
  32-63  cooperative.  Except as provided by Subsections (g) and (i) of this
  32-64  section, the rates of the electric cooperative are not subject to
  32-65  review.
  32-66        (g)  The commission shall review a change in rates under this
  32-67  section if, not later than the 60th day after the date the electric
  32-68  cooperative first complies with all requirements of Subsection (c)
  32-69  of this section, the commission receives a petition requesting
  32-70  review signed by:
   33-1              (1)  at least 10 percent of the members of the electric
   33-2  cooperative;
   33-3              (2)  members of the electric cooperative who purchased
   33-4  more than 50 percent of the electric cooperative's annual energy
   33-5  sales to a customer class in the test year, provided that the
   33-6  petition includes a certification of the purchases; or
   33-7              (3)  an executive officer of an affected electric
   33-8  utility, provided that the petition prescribes the particular class
   33-9  or classes for which a review is requested.
  33-10        (h)  When a person files a petition under Subsection (g) of
  33-11  this section, the person shall notify the electric cooperative in
  33-12  writing of the action.
  33-13        (i)  The commission may on its own motion review the rates of
  33-14  an electric cooperative if the commission first finds that there is
  33-15  good cause to believe that the electric cooperative is earning more
  33-16  than a reasonable return on overall system revenues or on revenue
  33-17  from a rate class.
  33-18        (j)  The commission shall conduct a review under Subsection
  33-19  (g)(1) or (2) of this section or under Subsection (i) of this
  33-20  section in accordance with Section 2.212 of this Act and the other
  33-21  applicable rate-setting principles of this subtitle, except that:
  33-22              (1)  the period for review does not begin until the
  33-23  electric cooperative files a rate-filing package as required by
  33-24  commission rules;
  33-25              (2)  the proposed change may not be suspended during
  33-26  the pendency of the review; however, the electric cooperative shall
  33-27  refund or credit against future bills all sums collected in excess
  33-28  of the rate finally set by the commission, if the commission so
  33-29  orders; and
  33-30              (3)  the electric cooperative shall observe the rates
  33-31  set by the commission until the rates are changed as provided by
  33-32  this section or by other sections of this Act.
  33-33        (k)  For a review conducted under Subsection (g)(3) of this
  33-34  section, the electric cooperative shall file with the commission a
  33-35  copy of the cost-of-service study required under Subsection (c)(3)
  33-36  of this section not later than the 10th day after the date the
  33-37  electric cooperative receives from the affected electric utility
  33-38  notice that a petition has been filed.  The commission shall
  33-39  determine for each class for which review has been requested the
  33-40  annual cost of providing service to the class, as stated in the
  33-41  electric cooperative's cost-of-service study, and the revenues for
  33-42  the class that would be produced by multiplying the rate set by the
  33-43  electric cooperative by the annual billing units for the class, as
  33-44  stated in the cost-of-service study.  If the electric cooperative
  33-45  proposes a rate class solely for a new customer, the electric
  33-46  cooperative shall estimate the reasonable annual cost of providing
  33-47  service to the class, and the electric cooperative shall base class
  33-48  revenues on reasonable estimates of billing units.
  33-49        (l)  The rate for each class for which review has been
  33-50  requested under Subsection (g)(3) of this section is suspended
  33-51  during the pendency of the review.  The commission shall dismiss
  33-52  the petition and approve the rates if the revenues for the class
  33-53  are equal to or greater than the cost of providing service to the
  33-54  class.  The commission shall disapprove the rate if the revenues
  33-55  for the class are less than the cost of providing service to the
  33-56  class; however, this action does not affect reconsideration of the
  33-57  rate as a part of any subsequent rate-making proceeding.  The rate
  33-58  adopted by the electric cooperative is deemed approved and may be
  33-59  placed into effect if the commission fails to make its final
  33-60  determination administratively not later than the 45th day after
  33-61  the date the electric cooperative files its cost-of-service study.
  33-62        (m)  Except as provided by Subsection (a) of this section,
  33-63  the members of an electric cooperative may at any time revoke the
  33-64  electric cooperative's election to be exempt from rate regulation
  33-65  or elect to again be exempt from rate regulation by majority vote
  33-66  of the members voting.
  33-67        (n)  This section does not affect the application of other
  33-68  provisions of this Act not directly related to rates or to the
  33-69  authority of the commission to require an electric cooperative to
  33-70  file reports required under this Act or rules adopted by the
   34-1  commission.  A service fee or a service rule or regulation set by
   34-2  the electric cooperative under this section must comply with
   34-3  commission rules applicable to all electric utilities.  The
   34-4  commission may determine whether an electric cooperative has
   34-5  unlawfully charged, collected, or received a rate for electric
   34-6  utility service.
   34-7        (o)  A single customer may seek a review of the rates of an
   34-8  electric cooperative pursuant to Section 2.211 of this Act if the
   34-9  customer consumes more than 250,000,000 kwh and purchases more than
  34-10  10 percent of the total energy sales or more than 7.5 percent of
  34-11  the revenues of the electric cooperative in any period of 12
  34-12  consecutive months within the 36 months preceding the date on which
  34-13  that customer initiates a proceeding under Section 2.211 of this
  34-14  Act.  A right conferred by this subsection is in addition to rights
  34-15  that the customer has under Subsection (g) of this section and not
  34-16  in limitation or in lieu of those rights.
  34-17        SECTION 2.16.  Subsection (b), Section 2.203, Public Utility
  34-18  Regulatory Act of 1995, as enacted by S.B. No. 319, Acts of the
  34-19  74th Legislature, Regular Session, 1995, is amended to read as
  34-20  follows:
  34-21        (b)  In fixing a reasonable return on invested capital, the
  34-22  regulatory authority shall consider, in addition to other
  34-23  applicable factors, efforts to comply with the utility's most
  34-24  recently approved individual integrated resource <statewide energy>
  34-25  plan, the efforts and achievements of such utility in the
  34-26  conservation of resources, the quality of the utility's services,
  34-27  the efficiency of the utility's operations, and the quality of the
  34-28  utility's management.
  34-29        SECTION 2.17.  Subsections (b) and (d), Section 2.208, Public
  34-30  Utility Regulatory Act of 1995, as enacted by S.B. No. 319, Acts of
  34-31  the 74th Legislature, Regular Session, 1995, are amended to read as
  34-32  follows:
  34-33        (b)  Transactions with Affiliated Interests.  Payment to
  34-34  affiliated interests for costs of any services or any property,
  34-35  right, or thing or for interest expense may not be allowed either
  34-36  as capital cost or as expense except to the extent that the
  34-37  regulatory authority shall find such payment to be reasonable and
  34-38  necessary for each item or class of items as determined by the
  34-39  commission.  Any such finding shall include specific findings of
  34-40  the reasonableness and necessity of each item or class of items
  34-41  allowed and a finding that the price to the utility is no higher
  34-42  than prices charged by the supplying affiliate to its other
  34-43  affiliates or divisions for the same item or class of items or to
  34-44  unaffiliated persons or corporations.  <The price paid by gas
  34-45  utilities to affiliated interests for natural gas from Outer
  34-46  Continental Shelf lands shall be subject to a rebuttable
  34-47  presumption that such price is reasonable if the price paid does
  34-48  not exceed the price permitted by federal regulation if such gas is
  34-49  regulated by any federal agency or if not regulated by a federal
  34-50  agency does not exceed the price paid by nonaffiliated parties for
  34-51  natural gas from Outer Continental Shelf lands.  The burden of
  34-52  establishing that such a price paid is not reasonable shall be on
  34-53  any party challenging the reasonableness of such price.>
  34-54        (d)  Expenses Disallowed.  The regulatory authority may not
  34-55  consider for ratemaking purposes the following expenses:
  34-56              (1)  legislative advocacy expenses, whether made
  34-57  directly or indirectly, including but not limited to legislative
  34-58  advocacy expenses included in trade association dues;
  34-59              (2)  payments, except those made under an insurance or
  34-60  risk-sharing arrangement executed before the date of loss, made to
  34-61  cover costs of an accident, equipment failure, or negligence at a
  34-62  utility facility owned by a person or governmental body not selling
  34-63  power inside the State of Texas;
  34-64              (3)  costs of processing a refund or credit under
  34-65  Subsection (e) of Section 2.212 of this Act; or
  34-66              (4)  any expenditure found by the regulatory authority
  34-67  to be unreasonable, unnecessary, or not in the public interest,
  34-68  including but not limited to executive salaries, advertising
  34-69  expenses, legal expenses, and civil or administrative penalties or
  34-70  fines.
   35-1        SECTION 2.18.  Section 2.211, Public Utility Regulatory Act
   35-2  of 1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
   35-3  Regular Session, 1995, is amended by adding Subsections (c), (d),
   35-4  and (e) to read as follows:
   35-5        (c)  Not later than the 120th day after the date the
   35-6  regulatory authority notifies the utility that the regulatory
   35-7  authority has decided to proceed with an inquiry under this section
   35-8  relating to the rates of the utility, the utility shall file a
   35-9  rate-filing package with the regulatory authority.  The regulatory
  35-10  authority may grant an extension of the 120-day period or waive the
  35-11  rate-filing package requirement on agreement of the parties.  The
  35-12  regulatory authority shall make a final determination concerning
  35-13  the matter not later than the 185th day after the date the utility
  35-14  files the rate-filing package.  However, the 185-day period is
  35-15  extended two days for each one day of actual hearing on the merits
  35-16  of the case that exceeds 15 days.
  35-17        (d)  At any time after an initial complaint is filed under
  35-18  this section, the regulatory authority may issue an interim order
  35-19  fixing temporary rates for the utility that will continue until a
  35-20  final determination on the matter is made.  On issuance of a final
  35-21  order, the regulatory authority may require the utility to refund
  35-22  to customers or to credit against future bills all sums collected
  35-23  during the period in which those temporary rates were in effect
  35-24  that are in excess of the rate finally ordered, plus interest at
  35-25  the current rate as finally determined by the commission or, if the
  35-26  amounts collected during the period in which the temporary rates
  35-27  were in effect are less than the amounts that would have been
  35-28  collected under the rate finally ordered, the regulatory authority
  35-29  shall authorize the utility to surcharge bills to recover the
  35-30  difference between those amounts, plus interest on the amount of
  35-31  the difference at the current rate as finally determined by the
  35-32  commission.
  35-33        (e)  If the 185-day period has been extended as provided by
  35-34  Subsection (c) of this section and the regulatory authority has not
  35-35  issued a final order or fixed temporary rates on or before the
  35-36  185th day, the rates charged by the utility on that 185th day
  35-37  automatically become temporary rates.  On issuance of a final
  35-38  order, the regulatory authority shall require the utility to refund
  35-39  to customers or to credit against future bills all sums collected
  35-40  during the period in which those temporary rates were in effect
  35-41  that are in excess of the rate finally ordered, plus interest at
  35-42  the current rate as finally determined by the commission or, if the
  35-43  amounts collected during the period in which the temporary rates
  35-44  were in effect are less than the amounts that would have been
  35-45  collected under the rate finally ordered, the regulatory authority
  35-46  shall authorize the utility to surcharge bills to recover the
  35-47  difference between those amounts, plus interest on the amount of
  35-48  the difference at the current rate as finally determined by the
  35-49  commission.
  35-50        SECTION 2.19.  Subsections (a), (e), and (g), Section 2.212,
  35-51  Public Utility Regulatory Act of 1995, as enacted by S.B. No. 319,
  35-52  Acts of the 74th Legislature, Regular Session, 1995, are amended to
  35-53  read as follows:
  35-54        (a)  Except as provided by Section 2.105(c) of this Act, a
  35-55  <A> utility may not make changes in its rates except by filing a
  35-56  statement of intent with the regulatory authority having original
  35-57  jurisdiction at least 35 days prior to the effective date of the
  35-58  proposed change.  The statement of intent shall include proposed
  35-59  revisions of tariffs and schedules and a statement specifying in
  35-60  detail each proposed change, the effect the proposed change is
  35-61  expected to have on the revenues of the company, the classes and
  35-62  numbers of utility consumers affected, and such other information
  35-63  as may be required by the regulatory authority's rules and
  35-64  regulations.  A copy of the statement of intent shall be mailed or
  35-65  delivered to the appropriate officer of each affected municipality,
  35-66  and notice shall be given by publication in conspicuous form and
  35-67  place of a notice to the public of such proposed change once in
  35-68  each week for four successive weeks prior to the effective date of
  35-69  the proposed change in a newspaper having general circulation in
  35-70  each county containing territory affected by the proposed change
   36-1  and by mail to such other affected persons as may be required by
   36-2  the regulatory authority's rules and regulations.  The regulatory
   36-3  authority may waive the publication of notice requirement
   36-4  prescribed by this subsection in a proceeding that involves a rate
   36-5  reduction for all affected ratepayers only.  The applicant shall
   36-6  give notice of the proposed rate change by mail to all affected
   36-7  utility customers.  The regulatory authority by rule shall also
   36-8  define other proceedings for which the publication of notice
   36-9  requirement prescribed by this subsection may be waived on a
  36-10  showing of good cause, provided that a waiver may not be granted in
  36-11  any proceeding involving a rate increase to any class or category
  36-12  of ratepayer.
  36-13        (e)  If the 150-day period has been extended, as provided for
  36-14  in Subsection (d) of this section, and the commission fails to make
  36-15  its final determination of rates within 150 days from the date that
  36-16  the proposed change otherwise would have gone into effect, the
  36-17  utility concerned may put a changed rate, not to exceed the
  36-18  proposed rate, into effect throughout all areas in which the
  36-19  utility sought to change its rates, including the areas over which
  36-20  the commission is exercising its appellate and its original
  36-21  jurisdiction, on the filing with the commission <regulatory
  36-22  authority> of a bond payable to the commission <regulatory
  36-23  authority> in an amount and with sureties approved by the
  36-24  commission <regulatory authority> conditioned upon refund and in a
  36-25  form approved by the commission <regulatory authority>.  The
  36-26  utility concerned shall refund or credit against future bills all
  36-27  sums collected during the period of suspension in excess of the
  36-28  rate finally ordered plus interest at the current rate as finally
  36-29  determined by the commission <regulatory authority>.
  36-30        (g)(1)  Except as permitted by Section 2.051 of this Act, a
  36-31  <A> rate or tariff set by the commission may not authorize a
  36-32  utility to automatically adjust and pass through to its customers
  36-33  changes in fuel or other costs of the utility.
  36-34              (2)(A)  Subdivision (1) of this subsection does not
  36-35  prohibit the commission from reviewing and providing for
  36-36  adjustments of a utility's fuel factor.  The commission by rule
  36-37  shall implement procedures that provide for the timely adjustment
  36-38  of a utility's fuel factor, with or without a hearing.  The
  36-39  procedures shall provide that the findings required by Section
  36-40  2.208(b) of this Act regarding fuel transactions with affiliated
  36-41  interests are made in a fuel reconciliation proceeding or in a rate
  36-42  case filed under Subsection (a) of this section or under Section
  36-43  2.211 of this Act.  The procedures shall provide an affected party
  36-44  notice and the opportunity to request a hearing before the
  36-45  commission.  However, the commission may adjust a utility's fuel
  36-46  factor without a hearing if the commission determines that a
  36-47  hearing is not necessary.  If the commission holds a hearing, the
  36-48  <Any revision of a utility's billings to its customers to allow for
  36-49  the recovery of additional fuel costs may be made only upon a
  36-50  public hearing and order of the commission.>
  36-51                    <(B)  The> commission may consider any evidence
  36-52  that is appropriate and in the public interest at such hearing.
  36-53  The commission shall render a timely decision approving,
  36-54  disapproving, or modifying the adjustment to the utility's fuel
  36-55  factor.
  36-56                    (B)  The commission by rule shall provide for the
  36-57  reconciliation of a utility's fuel costs on a timely basis.
  36-58                    (C)  A proceeding under this subsection may not
  36-59  be considered a rate case under this section.
  36-60              (3)  <The commission may, after a hearing, grant
  36-61  interim relief for fuel cost increases that are the result of
  36-62  unusual and emergency circumstances or conditions.>
  36-63              <(4)>(A)  This subsection applies only to increases or
  36-64  decreases in the cost of purchased electricity which have been:
  36-65                          (i)  accepted by a federal regulatory
  36-66  authority; or
  36-67                          (ii)  approved after a hearing by the
  36-68  commission.
  36-69                    (B)  The commission may utilize any appropriate
  36-70  method to provide for the adjustment of the cost of purchased
   37-1  electricity upon such terms and conditions as the commission may
   37-2  determine.  Such purchased electricity costs may be recovered
   37-3  concurrently with the effective date of the changed costs to the
   37-4  purchasing utility or as soon thereafter as is reasonably
   37-5  practical.
   37-6                    (C)  The commission may also provide for a
   37-7  mechanism to allow any public utility that has a noncontiguous
   37-8  geographical service area, and that purchases power for resale for
   37-9  that noncontiguous service area from public utilities that are not
  37-10  members of the Electric Reliability Council of Texas, to recover
  37-11  purchased power cost for that area in a manner that reflects the
  37-12  purchased power cost for that specific geographical noncontiguous
  37-13  area.  The commission may not, however, require such a mechanism
  37-14  for any electric cooperative corporation unless requested by the
  37-15  electric cooperative corporation.
  37-16        SECTION 2.20.  Section 2.215, Public Utility Regulatory Act
  37-17  of 1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
  37-18  Regular Session, 1995, is amended by adding Subsection (c) to read
  37-19  as follows:
  37-20        (c)  Notwithstanding any other provision of this Act, when
  37-21  the commission has approved the establishment of a separate rate
  37-22  class for electric service for a university and has grouped public
  37-23  schools in a separate rate class, the commission shall include
  37-24  community colleges in the rate class with public school customers.
  37-25        SECTION 2.21.  Section 2.251, Public Utility Regulatory Act
  37-26  of 1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
  37-27  Regular Session, 1995, is amended to read as follows:
  37-28        Sec. 2.251.  DEFINITION.  For the purposes of this subtitle
  37-29  only, "retail public utility" means any person, corporation,
  37-30  municipality, political subdivision or agency, or cooperative
  37-31  corporation, now or hereafter operating, maintaining, or
  37-32  controlling in Texas facilities for providing retail public utility
  37-33  service, except that a qualifying cogenerator selling electric
  37-34  energy at retail to the sole purchaser of the cogenerator's thermal
  37-35  output pursuant to Section 2.052 of this Act shall not be
  37-36  considered a retail public utility.
  37-37        SECTION 2.22.  Subsections (d), (e), and (f), Section 2.255,
  37-38  Public Utility Regulatory Act of 1995, as enacted by S.B. No. 319,
  37-39  Acts of the 74th Legislature, Regular Session, 1995, are amended to
  37-40  read as follows:
  37-41        (d)  This section does not apply to a certificate of
  37-42  convenience and necessity for an electric generating plant that is
  37-43  requested under Section 2.051 of this Act.  The commission may
  37-44  grant a certificate of convenience and necessity for an electric
  37-45  generating plant only in accordance with Section 2.051 of this Act.
  37-46        (e) <(1)  In addition to the requirements of this section, an
  37-47  electric utility applying for a certificate of convenience and
  37-48  necessity for a new generating plant must first file a notice of
  37-49  intent to file an application for certification.>
  37-50              <(2)  The notice of intent shall set out alternative
  37-51  methods considered to help meet the electrical needs, related
  37-52  electrical facilities, and the advantages and disadvantages of the
  37-53  alternatives.  In addition, the notice shall indicate compatibility
  37-54  with the most recent long-term forecast provided in this Act.>
  37-55              <(3)  The commission shall conduct a hearing on the
  37-56  notice of intent to determine the appropriateness of the proposed
  37-57  generating plant as compared to the alternatives and shall issue a
  37-58  report on its findings.  In conjunction with the issuance of the
  37-59  report, the commission shall render a decision approving or
  37-60  disapproving the notice.  Such decision shall be rendered within
  37-61  180 days from the date of filing the notice of intent.>
  37-62        <(e)(1)  On approval of the notice of intent, a utility may
  37-63  apply for certification for a generating plant, site, and site
  37-64  facilities not later than 12 months before construction is to
  37-65  commence.>
  37-66              <(2)  The application for certification shall contain
  37-67  such information as the commission may require to justify the
  37-68  proposed generating plant, site, and site facilities and to allow a
  37-69  determination showing compatibility with the most recent forecast.>
  37-70              <(3)  Certificates of convenience and necessity shall
   38-1  be granted on a nondiscriminatory basis if the commission finds
   38-2  that the proposed new plant is required under the service area
   38-3  forecast, that it is the best and most economical choice of
   38-4  technology for that service area as compatible with the
   38-5  commission's forecast, and that conservation and alternative energy
   38-6  sources cannot meet the need.>
   38-7        <(f)>  If the application for a certificate of convenience
   38-8  and necessity involves new transmission facilities, the commission
   38-9  shall approve or deny the application within one year after the
  38-10  date the application is filed.  If the commission does not approve
  38-11  or deny the application before this deadline, any party may seek a
  38-12  writ of mandamus in a district court of Travis County to compel the
  38-13  commission to make a decision on the application.
  38-14        SECTION 2.23.  Section 2302.043, Government Code, is amended
  38-15  to read as follows:
  38-16        Sec. 2302.043.  Order or Ruling.  (a)  A commission order or
  38-17  ruling entered under this chapter is considered to have been
  38-18  entered or adopted under the Public Utility Regulatory Act of 1995
  38-19  <(Article 1446c, Vernon's Texas Civil Statutes)>.
  38-20        (b)  A commission order or ruling entered under this chapter
  38-21  is enforced under Subtitle I, Title I, <Sections 71 through 77 of
  38-22  the> Public Utility Regulatory Act of 1995 <(Article 1446c,
  38-23  Vernon's Texas Civil Statutes)>.
  38-24        SECTION 2.24.  (a)  The Public Utility Commission of Texas by
  38-25  rule shall adopt a statewide integrated resource planning process
  38-26  as required by Section 2.051, Public Utility Regulatory Act of
  38-27  1995, as enacted by S.B. No. 319, Acts of the 74th Legislature,
  38-28  Regular Session, 1995, and as amended by this Act, not later than
  38-29  September 1, 1996.
  38-30        (b)  The changes in law made by this Act to Section 2.255,
  38-31  Public Utility Regulatory Act of 1995, as enacted by S.B. No. 319,
  38-32  Acts of the 74th Legislature, Regular Session, 1995, take effect
  38-33  September 1, 1996, and apply only to an application for a
  38-34  certificate of convenience and necessity filed on or after that
  38-35  date, except that, in the case of a utility for which the
  38-36  commission has not yet approved an individual integrated resource
  38-37  plan as of September 1, 1996, an application for a certificate of
  38-38  convenience and necessity is governed by the law in effect
  38-39  immediately preceding the effective date of this Act until the
  38-40  commission approves an integrated resource plan for the utility.
  38-41        SECTION 2.25.  The Public Utility Commission of Texas shall
  38-42  adopt the initial rules required by Section 2.057, Public Utility
  38-43  Regulatory Act of 1995, as added by this Act, not later than the
  38-44  180th day after the effective date of this Act.
  38-45        SECTION 2.26.  An exempt wholesale generator or power
  38-46  marketer required to register under Subsection (c), Section 2.053,
  38-47  Public Utility Regulatory Act of 1995, as added by this Act, shall
  38-48  register not later than the 90th day after the effective date of
  38-49  this Act.
  38-50        SECTION 2.27.  Except as otherwise provided by this Act, this
  38-51  Act takes effect September 1, 1995.
  38-52        SECTION 2.28.  The importance of this legislation and the
  38-53  crowded condition of the calendars in both houses create an
  38-54  emergency and an imperative public necessity that the
  38-55  constitutional rule requiring bills to be read on three several
  38-56  days in each house be suspended, and this rule is hereby suspended,
  38-57  and that this Act take effect and be in force according to its
  38-58  terms, and it is so enacted.
  38-59                               * * * * *