LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
74th Regular Session
March 23, 1995
TO: Honorable Ken Armbrister, Chair IN RE: Senate Bill No. 373
Committee on State Affairs By: Armbrister
Senate
Austin, Texas
FROM: John Keel, Director
In response to your request for a Fiscal Note on Senate Bill No.
373 (Relating to the continuation, operations, and functions of
the Public Utility Commission of Texas and the Office of Public
Utility Counsel; providing penalties.) this office has determined
the following:
The bill would make no appropriation but could provide the legal
basis for an appropriation of funds to implement the provisions
of the bill.
Fiscal implications of the bill are calculated from agency grand
total amounts included in the General Appropriations Bill
(Seventy-fourth Regular Session), as introduced: Public Utility
Commission (PUC), approximately $10 million each year of the
1996-1997 biennium; Office of the Public Utility Counsel (OPUC),
approximately $1.3 million each year of the biennium. The
General Appropriations Bill would provide for 211.5 PUC employees
and 21 OPUC employees each year.
No significant fiscal impacts for the state would be anticipated
with implementation of the following provisions of the bill:
Article 1, Sections 1.01-1.13, 1.15-1.25, 1.27, 1.28, 1.33, and
1.34. In addition, Article 1, Sections 1.14 and 1.29 are
standard Sunset Review provisions applied to agencies for
implementation without requiring significant additional cost, but
which would allow additional discretionary expenditures.
Fiscal implications of the bill to units of local government
cannot be determined, but are not expected to result in
significant additional costs or revenue reductions.
Article 1, Section 1.26 would provide authority to the commission
to impose administrative penalties. The provisions could result
in additional agency costs as well as revenues. However, the
amounts cannot be estimated accurately and the agency should be
able to perform associated functions with existing staff.
Article 1, Section 1.30-1.32 would provide for a utility division
to be established within the State Office of Administrative
Hearings to perform contested case hearings for the PUC and other
matters delegated by PUC rule. A task force would be established
immediately upon enactment of the bill to administer the transfer
of the hearings division from the PUC to the State Office of
Administrative Hearings. Personnel, equipment, data, facilities
and other items of the hearings division would be transferred on
September 1, 1995. The PUC has identified 26.5 positions and
other resources for a total amount of approximately $1.7 million
per year that would be subject to transfer. Additional costs
could occur if the SOAH is funded by interagency contract based
on hourly rates rather than with a direct General Revenue
appropriation. However, fiscal impacts estimated here are based
on an assumption that additional costs would be avoided.
Article 2, Section 2.01 and others would make a number of changes
regarding electric utility regulation, with the primary impact
related to the addition of exempt wholesale generators (EWGs) and
power marketers. The PUC would anticipate proceedings for the
adoption of two major policy rules for EWGs, the addition of
competitive issues in rate cases, and docketed EWG-related
complaints. Additional costs would be anticipated of $119,215 in
fiscal year 1996 and $109,771 in 1997, including 2 additional
employees each year. Additional costs would decline to
approximately $27,400 and 0.5 employees in fiscal year 2000.
Article 2, Section 2.02 would require the commission to prepare a
biennial report on the scope and impacts of competition and
industry restructuring on customers. Additional costs, based on
agency experience with similar reporting projects, would be
approximately $70,000, including 1.5 employees, during even years
and $26,000, including 0.5 employees, during odd years.
Article 2, Section 2.03 and others would require the commission
to establish an integrated resource planning (IRP) process
administered on a three year cycle. Additional costs would be
associated initially with complex rule adoption proceedings, then
with the case filings and hearings for approval of each utility's
plan. In addition, the PUC would be required to review the
state's transmission system to make appropriate recommendations
for improvements. Additional resources of approximately
$367,100, including 7 employees, would be needed for fiscal year
1996, and $839,500 in 1997, including 14.5 new employees.
Article 2, Section 2.05 and others would require exempt wholesale
generators and power marketers to sell only at wholesale.
Additional costs to the PUC are estimated for rule adoption
proceedings and case reviews of approximately $166,600, including
3 positions, in fiscal year 1996 and $152,900, including 3
positions, in each subsequent year.
Article 2, Sections 2.08 and 2.09 would grant the commission
authority to require a utility to provide transmission service at
wholesale to another utility or certain other entities. The
provision would require commission adoption of a major rule,
which would be performed with existing resources. The PUC would
also be required to submit a report to the 75th Legislature on
methods and procedures for quantifying the magnitude of stranded
investment. The study would result in additional costs for
fiscal years 1996 and 1997 of $85,800 and $78,700, respectively,
including 1.5 employees.
Article 2, Section 2.16 would allow certain electric cooperatives
to opt for rate deregulation if a majority of the cooperative
members elect to deregulate. This provision would result in
estimated savings beginning in fiscal year 1997 of $62,339,
including a reduction of 1 employee; $93,508 in 1998, including 2
employees; $124,677 in 1999 and 2000, including 2.5 employees
each year.
Article 2, Section 2.18 would require analyses of transactions
with affiliated interests. Additional staff would be needed to
identify the relevant markets for price comparisons and to
determine the appropriate expense to include in cost of service.
Additional costs are estimated of approximately $25,000 in fiscal
year 1996, including 0.5 employees, and $24,000 in each
subsequent year, including 0.5 employees.
The PUC estimates that the sum and magnitude of changes resulting
from the bill as a whole would result in an additional cost of
$57,900 in 1996 and $52,600 in each subsequent year, including 1
new position each year, to respond to a large increase in
consumer inquiries relating to implementation of the bill's
provisions.
The Office of Public Utility Counsel also projects needs for
significant additional resources to participate adequately in
rule adoption proceedings and other changes resulting from the
bill. Additional costs are anticipated of $603,105 in fiscal
year 1996 and $506,315 in each subsequent year, including 7
positions each year and expert witness fees.
Revenue implications from the bill's provisions cannot be
estimated, but no significant impacts are anticipated because the
bill does not directly affect utility taxes. Potential fiscal
impacts for the PUC and the OPUC that would result from the
bill's provisions will continue to be evaluated for possible
revision in subsequent fiscal notes for Senate Bill 373.
The probable fiscal implication of implementing the provisions of
the bill during each of the first five years following passage
is estimated as follows:
Fiscal Probable Cost Out Probable Savings Change in
Year of General from General Number of State
Revenue Fund 001 Revenue Fund 001 Employees from
FY 1995
1996 $1,502,681 $0 23.0
1997 1,789,352 62,339 29.0
1998 1,666,840 93,508 27.0
1999 1,622,707 124,677 25.0
2000 1,639,398 124,677 25.5
Similar annual fiscal implications would continue as long as the
provisions of the bill are in effect.
Source: Comptroller of Public Accounts, Public Utility
Commission,
Office of the Public Utility Counsel,
Sunset Commission
LBB Staff: JK, RM, DF