LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
74th Regular Session
April 18, 1995
TO: Honorable Ken Armbrister, Chair IN RE: Committee Substitute
Committee on State Affairs for Senate
Senate Bill No. 373
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:
Sections 1.01-1.13, 1.15-1.25, 1.27, 1.28, 1.33, and 1.34. In
addition, 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.
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.
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. Fiscal impacts
estimated here are based on an assumption that additional costs
would be avoided.
Section 1.33 would require public utilities to make a good faith
effort to award contracts to historically underutilized
businesses. Implementation of the provisions would require rule
adoption proceedings by the PUC as well as establishment of a
monitoring program, including reporting and compliance
procedures. Additional costs are anticipated of $72,748 in
fiscal year 1996, including 1 employee, and $21,954 in each
subsequent year, including 0.5 position.
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.
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 during odd years, including 0.5 position.
Section 2.03 and others would require the commission to establish
an integrated resource planning (IRP) process administered in 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 $621,102,
including 10 employees, would be needed for fiscal year 1996, and
$1,073,639 in 1997, including 19 new employees.
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.
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.
Section 2.11 would allow municipalities to be reimbursed by
utilities for their participation in integrated resource planning
proceedings. This provision, in combination with another
provision broadening the definition of "ratemaking proceedings,"
could result in additional costs for reviewing rate case expenses
and related reimbursements to municipalities. Amounts for such
potential costs cannot be accurately determined.
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; and
$124,677 in 1999 and 2000, including 2.5 employees each year.
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 $387,010 in fiscal
year 1996 and $330,428 in each subsequent year, including 5
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 to General Number of State
Revenue Fund 001 Revenue Fund 001 Employees from
FY 1995
1996 $1,587,366 $0 25.0
1997 1,845,768 62,339 32.0
1998 1,723,256 93,508 32.0
1999 1,679,123 124,677 30.0
2000 1,671,115 124,677 30.0
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
LBB Staff: JK, RM, DF