By Patterson S.B. No. 684
75R6115 CBH-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the development of a restructured competitive
1-3 electricity market.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. This Act may be referred to as the Texas Consumer
1-6 Power Act of 1997.
1-7 SECTION 2. Section 2.001(a), Public Utility Regulatory Act
1-8 of 1995 (Article 1446c-0, Vernon's Texas Civil Statutes), is
1-9 amended to read as follows:
1-10 (a) This title is enacted to protect the public interest
1-11 inherent in the rates and services of public utilities. The
1-12 legislature finds that public utilities that provide electric
1-13 transmission or distribution services are by definition monopolies
1-14 in many of the services they provide and in many of the areas they
1-15 serve, and that therefore the normal forces of competition that
1-16 operate to regulate prices in a free enterprise society do not
1-17 always operate. For those reasons [, and that therefore], except
1-18 as otherwise provided for in this Act, utility rates, operations,
1-19 and services are regulated by public agencies. The purpose of this
1-20 title is to establish a comprehensive regulatory system that is
1-21 adequate to the task of regulating public utilities as defined in
1-22 this title, to assure rates, operations, and services that are just
1-23 and reasonable to consumers and to the utilities. The legislature
1-24 finds that the merchant and generation functions of the [wholesale]
2-1 electric industry, through federal legislative, judicial, and
2-2 administrative actions, are [is] becoming [a] more competitive
2-3 and do [industry which does] not lend themselves [itself] to
2-4 traditional electric utility regulatory rules, policies, and
2-5 principles and that, therefore, the public interest requires that
2-6 new rules, policies, and principles be formulated and applied to
2-7 protect the public interest in a more competitive marketplace. The
2-8 legislature further finds that increasing competition in the
2-9 merchant and generation functions of the electric industry and
2-10 broadening the market to include retail customers of electricity
2-11 will lower electricity prices, create a more responsive and
2-12 reliable electric industry, and increase the number and variety of
2-13 electricity services available to the residents of this state. The
2-14 development of a competitive [wholesale] electric market that
2-15 allows each retail customer to choose the customer's provider of
2-16 electricity and that encourages full and fair competition among all
2-17 merchants of electricity and electric services [for increased
2-18 participation by both utilities and certain nonutilities] is in the
2-19 public interest. It is the intent of the legislature that the
2-20 commission exercise its authority in order to stimulate the
2-21 development of a competitive market for the retail sale of
2-22 electricity, while also ensuring that this market operates
2-23 efficiently and fairly for all consumers. The commission shall
2-24 also ensure that the needs of consumers are met during a period of
2-25 transition from monopoly service to a more competitive market.
2-26 Electric service is essential for health and safety, and access to
2-27 reliable and affordable service must be ensured for all customers,
3-1 both urban and rural, in a more competitive electric market. It is
3-2 also the intent of the legislature that the commission ensure that
3-3 low-income customers have access to payment assistance programs and
3-4 targeted energy conservation, weatherization, and energy audit
3-5 programs.
3-6 SECTION 3. Section 2.0011, Public Utility Regulatory Act of
3-7 1995 (Article 1446c-0, Vernon's Texas Civil Statutes), is amended
3-8 by amending Subdivision (1) and adding Subdivisions (8)-(16) to
3-9 read as follows:
3-10 (1) "Public utility" or "utility" means any person,
3-11 corporation, river authority, cooperative corporation, or any
3-12 combination thereof, other than a municipal corporation, or their
3-13 lessees, trustees, and receivers, now or hereafter owning or
3-14 operating for compensation in this state equipment or facilities
3-15 for producing, generating, transmitting, distributing, selling, or
3-16 furnishing electricity in this state (hereinafter "electric
3-17 utility"); provided, however, that the term does not include:
3-18 (A) [this definition may not be construed to
3-19 apply to or include] a qualifying facility;
3-20 (B) a power merchant;
3-21 (C) [. The term does not include] an exempt
3-22 wholesale generator; [,]
3-23 (D) a power marketer; [, or]
3-24 (E) a corporation as prescribed by Section
3-25 2.0012 of this Act; [,] or
3-26 (F) any person or corporation not otherwise a
3-27 public utility that:
4-1 (i) [(A)] furnishes, through sole or joint
4-2 ownership of equipment or facilities, the services or commodity
4-3 described in this section only to itself, its employees, or its
4-4 tenants as an incident of such employee service or tenancy, when
4-5 such service or commodity is not resold to or used by others;
4-6 (ii) [(B)] owns or operates in this state
4-7 equipment or facilities for producing, generating, transmitting,
4-8 distributing, selling, or furnishing electric energy to an electric
4-9 utility, if the equipment or facilities are used primarily for the
4-10 production and generation of electric energy for consumption by the
4-11 person or corporation; or
4-12 (iii) [(C)] owns or operates in this state
4-13 a recreational vehicle park that provides metered electric service
4-14 in accordance with Article 1446d-2, Revised Statutes, provided
4-15 that a recreational vehicle park owner is considered a public
4-16 utility if the owner fails to comply with Article 1446d-2, Revised
4-17 Statutes, with regard to the metered sale of electricity at the
4-18 recreational vehicle park.
4-19 (8) "Customer choice" means the freedom of a retail
4-20 customer to purchase electric services, either individually or on
4-21 an aggregated basis, from the provider or providers of the
4-22 customer's choice, and to choose among various fuel types, energy
4-23 efficiency programs, and renewable power suppliers.
4-24 (9) "Designated supplier" means a power merchant
4-25 selected by the commission to provide electricity to customers in
4-26 an electric utility's certificated service area who do not choose
4-27 an electricity supplier.
5-1 (10) "Distribution service" means the movement of
5-2 electric energy over a facility rated at a voltage of less than 60
5-3 kilovolts, including constructing or expanding such a facility.
5-4 (11) "Independent system operator" means an
5-5 independent, nonprofit entity, the purpose of which is to:
5-6 (A) coordinate the physical supply of
5-7 electricity throughout the Electric Reliability Council of Texas;
5-8 and
5-9 (B) maintain or improve the reliability,
5-10 security, and stability of the bulk power system.
5-11 (12) "Local distribution utility" means an electric
5-12 utility, including a municipally owned utility, that owns or
5-13 operates a distribution facility and provides distribution service
5-14 to retail customers.
5-15 (13) "Power merchant" means a person who produces,
5-16 generates, sells, or furnishes electricity to retail customers for
5-17 compensation and does not own or operate transmission or
5-18 distribution facilities other than facilities that are:
5-19 (A) not dedicated to public use;
5-20 (B) used by the power merchant, its employees,
5-21 or its tenants; or
5-22 (C) otherwise excluded from the definition of
5-23 "public utility" under Subdivision (1)(F) of this section.
5-24 (14) "Retail customer" means the end-use customer who
5-25 purchases and consumes electricity.
5-26 (15) "Recovery period" means:
5-27 (A) for investor-owned utilities, the period
6-1 beginning on September 1, 1997, and ending on September 1, 2000;
6-2 and
6-3 (B) for electric cooperatives and municipally
6-4 owned utilities, the period determined under Section 2.456 of this
6-5 Act.
6-6 (16) "Uneconomic utility investments" means only those
6-7 legitimate and verifiable costs of generation-related assets,
6-8 including generation facilities, regulatory assets, and purchased
6-9 power contracts, that were being recovered in rates approved by the
6-10 regulatory authority as of September 1, 1995, and that become
6-11 uneconomic solely as a result of the implementation of retail
6-12 competition and customer choice under this Act. The term does not
6-13 include:
6-14 (A) costs that are not recovered because of the
6-15 rate reduction required by Section 2.2115 of this Act;
6-16 (B) costs incurred after September 1, 1995;
6-17 (C) administrative or general costs, operation
6-18 or maintenance costs, or fuel costs;
6-19 (D) any costs caused by utility management that
6-20 were not specifically mandated by regulation or legislation or that
6-21 have been determined by the regulatory authority not to be prudent
6-22 or currently used and useful; or
6-23 (E) any difference between asset book value and
6-24 market value due to wholesale competition or for any reason other
6-25 than the implementation of retail competition and customer choice
6-26 under this Act.
6-27 SECTION 4. Subtitle B, Title II, Public Utility Regulatory
7-1 Act of 1995 (Article 1446c-0, Vernon's Texas Civil Statutes), is
7-2 amended by adding Section 2.0535 to read as follows:
7-3 Sec. 2.0535. POWER MERCHANTS. (a) A power merchant may sell
7-4 electricity directly to a retail customer, either individually or
7-5 on an aggregated basis. The price of that electricity shall be
7-6 determined between the power merchant and the retail customer and
7-7 may not be reviewed by the regulatory authority.
7-8 (b) A power merchant may not sell electricity to residential
7-9 or small commercial consumers unless the power merchant obtains a
7-10 license from the commission. The commission shall adopt criteria
7-11 and establish procedures for licensure, including reasonable
7-12 standards of financial soundness.
7-13 (c) The commission shall monitor the marketing practices of
7-14 power merchants.
7-15 (d) The commission may adopt a code of conduct governing the
7-16 actions of power merchants to ensure against false, misleading, or
7-17 deceptive trade practices.
7-18 (e) If a licensed power merchant sells all or a portion of
7-19 its operations in this state to another power merchant, the new
7-20 power merchant must:
7-21 (1) obtain a license from the commission;
7-22 (2) notify each affected customer of the previous
7-23 power merchant of the sale; and
7-24 (3) provide those customers with the opportunity to
7-25 switch to another supplier.
7-26 (f) The commission may revoke a power merchant's license,
7-27 impose a fine, or otherwise sanction a licensed power merchant if
8-1 the power merchant:
8-2 (1) deliberately engages in a misleading or fraudulent
8-3 trade practice, including the provision of false or misleading
8-4 information concerning the power merchant's generation sources or
8-5 fuel types;
8-6 (2) changes a customer's provider of electricity
8-7 without that customer's consent;
8-8 (3) engages in anticompetitive practices; or
8-9 (4) otherwise violates this Act or a commission rule
8-10 adopted under this Act.
8-11 (g) The commission may take an action under Subsection (f)
8-12 of this section only after providing the power merchant an
8-13 opportunity for a public hearing.
8-14 (h) The commission may enter an order that prevents a power
8-15 merchant from marketing or adding new customers during a revocation
8-16 proceeding if the commission finds that there is probable cause to
8-17 believe the actions of the power merchant will harm customers or
8-18 the reliability of the electrical supply.
8-19 SECTION 5. Section 2.056(a), Public Utility Regulatory Act
8-20 of 1995 (Article 1446c-0, Vernon's Texas Civil Statutes), is
8-21 amended to read as follows:
8-22 (a) The commission may require a utility, including a
8-23 municipally owned utility, to provide transmission service [at
8-24 wholesale] to any entity, including a retail customer, a power
8-25 merchant, another utility, a qualifying facility, an exempt
8-26 wholesale generator, or a power marketer and may determine whether
8-27 the terms and conditions for the transmission service are
9-1 reasonable. The commission may require transmission service [at
9-2 wholesale], including construction or enlargement of facilities, in
9-3 a proceeding not related to approval of an integrated resource
9-4 plan. The commission may not issue a decision or rule relating to
9-5 transmission service that is contrary to an applicable decision,
9-6 rule, or policy statement of a federal regulatory agency having
9-7 jurisdiction.
9-8 SECTION 6. Section 2.057, Public Utility Regulatory Act of
9-9 1995 (Article 1446c-0, Vernon's Texas Civil Statutes), is amended
9-10 by amending the heading and by amending Subsection (a) to read as
9-11 follows:
9-12 Sec. 2.057. WHOLESALE AND RETAIL COMPETITION. (a) A public
9-13 utility that owns or operates transmission facilities shall provide
9-14 [wholesale] transmission service at rates, terms of access, and
9-15 conditions that are comparable to the rates, terms of access, and
9-16 conditions of the utility's use of its system. The commission
9-17 shall ensure that utilities provide nondiscriminatory access to
9-18 transmission service for all entities, including retail customers,
9-19 power merchants, qualifying facilities, exempt wholesale
9-20 generators, power marketers, and public utilities. [The commission
9-21 shall adopt rules within 180 days of the effective date of this
9-22 section relating to wholesale transmission service, rates, and
9-23 access.] The commission rules relating to transmission service
9-24 shall be consistent with the standards in this section, shall not
9-25 be contrary to federal law, including any applicable policy
9-26 statement, decision, or rule of a federal regulatory agency, having
9-27 jurisdiction and shall require transmission services that are not
10-1 less than the transmission services the Federal Energy Regulatory
10-2 Commission may require in similar circumstances. The rules shall
10-3 also provide that all ancillary services associated with a
10-4 utility's [discounted] wholesale and retail sales shall be provided
10-5 by the utility at the same prices and under the same terms and
10-6 conditions as such services are provided to third persons, and all
10-7 ancillary services provided by the utility and associated with its
10-8 [discounted wholesale] sales to wholesale or retail customers
10-9 shall also be provided to third persons upon request. Tariffs
10-10 required under this section [All public utilities that own or
10-11 operate transmission facilities shall file tariffs implementing
10-12 such rules within 60 days after the commission has adopted
10-13 transmission pricing and access rules pursuant to this section
10-14 unless the terms and conditions for access and pricing are included
10-15 in the tariff of another utility. Such tariffs] shall be filed
10-16 with the appropriate state or federal regulatory agency having
10-17 jurisdiction over the transmission service of the entity filing the
10-18 tariff.
10-19 SECTION 7. Subtitle B, Title II, Public Utility Regulatory
10-20 Act of 1995 (Article 1446c-0, Vernon's Texas Civil Statutes), is
10-21 amended by adding Section 2.058 to read as follows:
10-22 Sec. 2.058. INDEPENDENT SYSTEM OPERATOR. (a) The
10-23 commission shall oversee the establishment of an Electric
10-24 Reliability Council of Texas independent system operator as a
10-25 nonprofit, independent entity. The independent system operator
10-26 shall establish a governing board composed of representatives of
10-27 all market participants, including retail customers.
11-1 (b) An entity that owns generation, transmission, or
11-2 distribution facilities in this state may not have majority
11-3 ownership or control of the independent system operator.
11-4 (c) The independent system operator may not:
11-5 (1) have a financial or commercial interest in:
11-6 (A) an entity that owns generation,
11-7 transmission, or distribution facilities;
11-8 (B) a power marketer or power merchant; or
11-9 (C) a transaction among or between buyers and
11-10 sellers of electricity; or
11-11 (2) give any user of the state's transmission system
11-12 preferential treatment.
11-13 (d) The independent system operator has the ultimate
11-14 responsibility over the operation and planning of the bulk power
11-15 system within the Electric Reliability Council of Texas and shall
11-16 ensure efficient use and reliable operation of the system. The
11-17 commission shall grant the independent system operator the
11-18 authority the commission considers necessary to ensure the
11-19 reliability of the system and to carry out its duties consistent
11-20 with this Act.
11-21 (e) The independent system operator shall:
11-22 (1) regularly review the reliability and safety of
11-23 the state's transmission system and the need for expansion or
11-24 upgrade of the system;
11-25 (2) adopt appropriate guidelines for operating and
11-26 planning reserves;
11-27 (3) redispatch generation as needed to relieve
12-1 transmission congestion or in an emergency;
12-2 (4) recommend new transmission facilities to be
12-3 constructed in accordance with approved plans;
12-4 (5) require any necessary operating actions regarding
12-5 distribution facilities that affect transmission;
12-6 (6) own and operate communication facilities to
12-7 acquire independent information about the bulk power system;
12-8 (7) administer the applicable transmission tariffs;
12-9 (8) provide a dispute resolution procedure for
12-10 disputes related to the operation of the state's transmission and
12-11 distribution system;
12-12 (9) provide a single point of contact for the
12-13 initiation of transmission transactions;
12-14 (10) operate and maintain the Electric Reliability
12-15 Council of Texas' electronic information network;
12-16 (11) administer transaction accounting among market
12-17 participants;
12-18 (12) ensure the availability of ancillary services;
12-19 and
12-20 (13) coordinate planning among the owners of the
12-21 state's transmission system.
12-22 (f) As a condition for having nondiscriminatory access to
12-23 the Electric Reliability Council of Texas grid, each entity that
12-24 uses the bulk power system, including a generator, power merchant,
12-25 power marketer, electric utility, or municipally owned utility,
12-26 must provide to the independent system operator any information the
12-27 operator determines is necessary to plan and operate the bulk
13-1 power system. The information may be subject to a confidentiality
13-2 agreement if necessary. The commission is entitled to access to
13-3 all information maintained by the independent system operator,
13-4 subject to applicable confidentiality requirements. Information
13-5 subject to a confidentiality agreement is confidential and not
13-6 subject to disclosure under Chapter 552, Government Code.
13-7 (g) The commission shall ensure that one or more entities,
13-8 acting alone or in concert, do not attempt to limit access to the
13-9 system by a competitor or to engage in other anticompetitive
13-10 practices.
13-11 (h) The Electric Reliability Council of Texas' electronic
13-12 information network may be accessed by any competing buyer or
13-13 seller of generation services and is open to the public on a fair
13-14 and nondiscriminatory basis, consistent with the purposes of this
13-15 Act.
13-16 (i) Every three years, the independent system operator shall
13-17 submit to the commission a plan that identifies system needs and
13-18 alternatives for meeting those needs, including distributed
13-19 resources and energy efficiency. The plan must include the
13-20 independent system operator's recommendations for meeting the needs
13-21 identified. The commission may require an electric utility to
13-22 construct or expand transmission facilities if the commission finds
13-23 that the facilities are reasonable and necessary for meeting
13-24 system needs.
13-25 (j) In a geographical area in this state that is not located
13-26 within the Electric Reliability Council of Texas, the commission
13-27 shall monitor and intervene as necessary in each Federal Energy
14-1 Regulatory Commission proceeding that:
14-2 (1) affects the physical supply of electricity to
14-3 retail customers in this state who are located in a reliability
14-4 council other than the Electric Reliability Council of Texas;
14-5 (2) affects the reliability, security, or stability of
14-6 the bulk power system affecting retail customers in this state in
14-7 a reliability council other than the Electric Reliability Council
14-8 of Texas; or
14-9 (3) establishes an independent system operator with
14-10 primary responsibility over the operation and planning of any
14-11 transmission system serving retail customers in this state in a
14-12 reliability council other than the Electric Reliability Council of
14-13 Texas.
14-14 SECTION 8. Subtitle E, Title II, Public Utility Regulatory
14-15 Act of 1995 (Article 1446c-0, Vernon's Texas Civil Statutes), is
14-16 amended by adding Section 2.2015 to read as follows:
14-17 Sec. 2.2015. CUSTOMER CHOICE BY CERTAIN ELECTRIC
14-18 COOPERATIVES. (a) This section applies only to an electric
14-19 cooperative corporation that provides retail electric utility
14-20 service at distribution voltage.
14-21 (b) Notwithstanding any other provision of this Act, an
14-22 electric cooperative corporation may not be required to provide
14-23 customer choice in accordance with this Act to the cooperative's
14-24 retail customers.
14-25 (c) The general membership of an electric cooperative
14-26 corporation may elect at any time to allow the customers of that
14-27 cooperative the opportunity to exercise customer choice in
15-1 accordance with this Act. An electric cooperative holding an
15-2 election under this section shall send a ballot by mail to each
15-3 electric cooperative member within the cooperative's certificated
15-4 service area. The ballot shall be printed to permit voting for or
15-5 against customer choice. If the proposition for customer choice is
15-6 approved by a majority of the members voting in the election, the
15-7 electric cooperative shall file with the commission a:
15-8 (1) restructuring plan in accordance with Section
15-9 2.308 of this Act; and
15-10 (2) recovery plan, if necessary, under Subtitle J of
15-11 this Act.
15-12 (d) If an electric cooperative has not elected to allow
15-13 customer choice under this Act:
15-14 (1) a power merchant may not sell electricity directly
15-15 to a retail customer within the certificated service area of the
15-16 cooperative;
15-17 (2) the cooperative may not sell electricity to
15-18 customers outside of the cooperative's certificated service area;
15-19 and
15-20 (3) the cooperative may purchase electricity from a
15-21 power merchant on behalf of the cooperative's customers.
15-22 (e) If an electric cooperative elects to allow customer
15-23 choice under this Act:
15-24 (1) a power merchant may sell electricity directly to
15-25 a retail customer within the certificated service area of the
15-26 cooperative; and
15-27 (2) the cooperative may sell electricity to customers
16-1 outside of the cooperative's certificated service area.
16-2 (f) Regardless of whether an electric cooperative elects to
16-3 provide customer choice, the transmission and distribution
16-4 facilities of the cooperative are subject to Section 2.2011 of
16-5 this Act.
16-6 SECTION 9. Subtitle E, Title II, Public Utility Regulatory
16-7 Act of 1995 (Article 1446c-0, Vernon's Texas Civil Statutes), is
16-8 amended by adding Sections 2.2115 and 2.2142 to read as follows:
16-9 Sec. 2.2115. RATE REDUCTION. (a) The legislature finds
16-10 that the development of a wholesale competitive generation market
16-11 was expected to directly benefit consumers in a competitive market
16-12 but that the current regulatory system has not passed these
16-13 benefits through to retail customers. The investor-owned utilities
16-14 have depreciating assets that require a reduction in retail rates.
16-15 Also, investor-owned utilities have significant amounts of cash
16-16 from favorable regulatory treatment of federal taxes that have been
16-17 invested widely beyond this state, the United States, and the
16-18 electric utility industry to substantially increase shareholder
16-19 value and broadly diversify shareholder interests and risks.
16-20 Therefore, the legislature finds that reductions in the rates of
16-21 investor-owned utilities are in the public interest to ensure a
16-22 fair sharing of the burden of uneconomic utility investments and to
16-23 properly balance the needs of customers in this state with the
16-24 needs of utility shareholders during a transition to greater
16-25 competition.
16-26 (b) Notwithstanding any other provision of this Act,
16-27 effective September 1, 1997, each investor-owned utility shall
17-1 reduce each base rate charged to each class of customers by 15
17-2 percent.
17-3 (c) On or after September 1, 1997, an electric utility
17-4 required to reduce rates under Subsection (b) of this section may
17-5 file with the commission a petition to reduce the rate reduction.
17-6 The utility has the burden of proving and demonstrating that it has
17-7 mitigated and reduced its costs to the greatest extent reasonably
17-8 practical and that it will not have a reasonable opportunity to
17-9 maintain its financial integrity with the full rate reduction.
17-10 (d) The commission shall process a petition received under
17-11 Subsection (c) of this section as a contested case with full
17-12 opportunity for a hearing by affected parties. The commission
17-13 shall determine the appropriate rate reduction that will allow the
17-14 utility to maintain its financial integrity while taking all
17-15 reasonable actions to mitigate its costs.
17-16 (e) For purposes of this section, "financial integrity"
17-17 means having a reasonable opportunity to maintain a pretax interest
17-18 coverage ratio consistent with an investment grade bond rating that
17-19 is not higher than the utility's Standard & Poor's bond rating
17-20 based on guidelines established by Standard & Poor's in effect on
17-21 September 1, 1997.
17-22 Sec. 2.2142. CUSTOMER CHOICE FOR PUBLIC SCHOOLS AND
17-23 EDUCATIONAL INSTITUTIONS. (a) Notwithstanding any other provision
17-24 of this Act, each public school and private and public college in
17-25 this state, including a junior college, shall have the opportunity
17-26 to choose the school's or college's electricity supplier beginning
17-27 on August 1, 1998.
18-1 (b) The commission shall work with the Texas Education
18-2 Agency, the General Services Commission, and other appropriate
18-3 state agencies to ensure that each school and college receives
18-4 sufficient information and assistance to allow the school or
18-5 college to choose its electricity supplier.
18-6 (c) The commission shall monitor the experience with
18-7 customer choice gained by the schools and colleges and shall use
18-8 the information to implement retail customer choice under this Act.
18-9 (d) Notwithstanding any other law, savings realized by a
18-10 school district under this section may not be considered in
18-11 determining the amount of state funding the district is entitled to
18-12 receive.
18-13 SECTION 10. Title II, Public Utility Regulatory Act of 1995
18-14 (Article 1446c-0, Vernon's Texas Civil Statutes), is amended by
18-15 adding Subtitle G to read as follows:
18-16 SUBTITLE G. RETAIL CUSTOMER CHOICE
18-17 Sec. 2.301. APPLICATION. This subtitle does not apply to an
18-18 electric cooperative corporation that has not elected to provide
18-19 customer choice under this Act or to the customers of that
18-20 cooperative.
18-21 Sec. 2.302. IMPLEMENTATION OF RETAIL CUSTOMER CHOICE. (a)
18-22 Each residential or small commercial retail customer shall have
18-23 customer choice not later than January 1, 1999. All other retail
18-24 customers shall have customer choice not later than January 1,
18-25 2000.
18-26 (b) A retail customer's total base rates in place on January
18-27 1, 1998, as reduced under Section 2.2115 of this Act, may not
19-1 increase during the applicable recovery period.
19-2 Sec. 2.303. AGGREGATION. (a) A retail customer, including
19-3 a residential or small commercial retail customer, may, but is not
19-4 required to, aggregate the customer's usage of electricity with
19-5 other customers to purchase electricity.
19-6 (b) Notwithstanding any other law, a municipality, political
19-7 subdivision, or membership association may serve as a voluntary
19-8 aggregator for the retail customers within its boundaries or
19-9 membership. A municipality or political subdivision shall provide
19-10 to a retail customer within the municipality or political
19-11 subdivision the opportunity to participate in the aggregation, but
19-12 may not require the customer to participate.
19-13 Sec. 2.304. RULES RELATING TO CUSTOMER CHOICE. (a) The
19-14 commission shall oversee the transition to customer choice and
19-15 shall adopt rules to:
19-16 (1) define the responsibilities of electric utilities,
19-17 municipally owned utilities, and power merchants;
19-18 (2) ensure the development of a fully functioning,
19-19 robust competitive market for generation services, demand-side
19-20 management, and energy services in which retail customers have
19-21 meaningful choices of electricity suppliers and energy service
19-22 providers; and
19-23 (3) protect consumers and the public interest.
19-24 (b) The rules, at a minimum, must:
19-25 (1) provide for the safe and reliable operation of the
19-26 electric system;
19-27 (2) ensure that cost shifting does not occur among
20-1 retail customer classes during the applicable recovery period;
20-2 (3) ensure that each retail customer class has a
20-3 reasonable opportunity to benefit from improvements in economic
20-4 efficiency and service choices;
20-5 (4) ensure that each customer, including a residential
20-6 or small commercial retail customer, has meaningful access to
20-7 customer choice;
20-8 (5) protect customers and competitors from abusive or
20-9 anticompetitive practices, including:
20-10 (A) the abuse of market power;
20-11 (B) pricing cross-subsidies between the
20-12 competitive and monopoly operations, if any, of an electric or
20-13 municipally owned utility; and
20-14 (C) unfair trade practices;
20-15 (6) protect consumers from abusive or anticompetitive
20-16 practices relating to:
20-17 (A) marketing;
20-18 (B) extending credit;
20-19 (C) demand-side management programs; and
20-20 (D) collection procedures;
20-21 (7) establish consumer protection and information
20-22 standards for all power merchants that sell to residential or small
20-23 commercial retail customers;
20-24 (8) require power merchants to comply, at a minimum,
20-25 with the billing and service protections applicable to electric
20-26 utilities on August 31, 1997;
20-27 (9) prescribe minimum standards for information that
21-1 must be included in each customer's bill;
21-2 (10) require the unbundling of existing rates and of
21-3 metering, billing, demand-side management, marketing, and customer
21-4 service expenses from the cost of transmission and distribution
21-5 services, to ensure that the services may be competitively
21-6 provided;
21-7 (11) ensure that a customer may pay the customer's
21-8 bill at an accessible location; and
21-9 (12) establish additional consumer protection
21-10 standards that are necessary in a competitive retail electricity
21-11 market.
21-12 (c) The commission by rule shall prescribe minimum standards
21-13 for contracts between power merchants and residential or small
21-14 commercial retail customers. The minimum standards must require
21-15 the disclosure of pricing, contract length, termination provisions,
21-16 and anticipated or historical generation sources by location, fuel
21-17 type, and emissions profile. If the exact sources of the power
21-18 merchant's generation cannot readily be identified, the power
21-19 merchant may choose to base its emissions profile on regional or
21-20 national averages for generation sources and emissions. The
21-21 commission shall periodically review disclosures under this
21-22 subsection for accuracy.
21-23 (d) A customer is entitled to change power merchants. The
21-24 commission by rule shall prohibit a local distribution utility or
21-25 power merchant from altering a retail customer's choice of power
21-26 merchant without third-party verification of the customer's
21-27 consent.
22-1 (e) A residential or small business retail customer is
22-2 entitled to participate in the choice of a power merchant using
22-3 the customer's existing meter. The commission by rule shall
22-4 adopt guidelines for settlements of electricity sales that allow a
22-5 customer to choose a power merchant without obtaining a specialized
22-6 meter.
22-7 (f) The commission by rule shall ensure that a customer
22-8 receives a single bill for electric service that includes separate,
22-9 unbundled charges for electricity, transmission, distribution, and
22-10 energy efficiency services, and any competitive transition charge.
22-11 The bill must also include the information regarding generation
22-12 sources required by Subsection (c) of this section.
22-13 (g) The commission by rule shall:
22-14 (1) ensure that a customer's usage, billing, and
22-15 payment history are protected from disclosure unless the disclosure
22-16 is authorized by law or has been approved by the customer in
22-17 writing; and
22-18 (2) require an electric or municipally owned utility
22-19 to make available to all power merchants the name, address, and
22-20 account number of each customer to ensure equal access to
22-21 customers.
22-22 (h) The commission by rule shall:
22-23 (1) prohibit a power merchant from disconnecting a
22-24 customer's service in extreme weather conditions;
22-25 (2) require a power merchant to provide adequate
22-26 notice of a proposed termination or abandonment of service, change
22-27 in quality of service, or change in the price of a service; and
23-1 (3) ensure the right to fair treatment by power
23-2 merchants and electric utilities, including the right to resolve
23-3 service or bill disputes with knowledgeable customer service
23-4 representatives.
23-5 (i) The commission shall modify its rules regarding customer
23-6 relations (16 T.A.C. Section 23.41), applicant and customer
23-7 deposits (16 T.A.C. Section 23.43), discontinuance of service (16
23-8 T.A.C. Section 23.46), meters (16 T.A.C. Section 23.47), continuity
23-9 of service (16 T.A.C. Section 23.48), and utility submetering (16
23-10 T.A.C. Section 23.51) to ensure that at least the same level of
23-11 customer protection against potential abuses and the same quality
23-12 of service that exists on August 31, 1997, is maintained in a
23-13 restructured electric industry while allowing the market
23-14 flexibility necessary for unbundling, customer choice, and
23-15 technological change.
23-16 Sec. 2.305. PUBLIC EDUCATION PROGRAM. The commission shall
23-17 supervise a comprehensive public education program to inform each
23-18 customer, including a rural, Spanish-speaking, or low-income
23-19 customer, of the customer's ability to choose a power merchant and
23-20 of the availability of designated suppliers.
23-21 Sec. 2.306. CUSTOMER COMPLAINT RESOLUTION. (a) The
23-22 commission shall establish and advertise a citizens' hotline with a
23-23 toll-free number to respond to:
23-24 (1) customer complaints about the customer's electric
23-25 service; and
23-26 (2) consumer questions about the transition to a more
23-27 competitive retail market.
24-1 (b) Each local distribution utility and power merchant
24-2 shall notify each customer at the time service is initiated and on
24-3 receipt of a customer complaint of the customer's right to
24-4 informally appeal the complaint to the commission by writing or by
24-5 calling the commission's toll-free number.
24-6 (c) The commission shall establish simplified consumer
24-7 hearing procedures, including procedures to resolve a complaint by
24-8 a recorded hearing held by a telephone conference call or other
24-9 type of call.
24-10 (d) A local distribution utility or power merchant may not
24-11 disconnect or discontinue service to a customer because of a
24-12 dispute if the customer has filed a complaint that is pending with
24-13 the commission.
24-14 (e) The administrative law judge or commission hearings
24-15 officer considering a complaint shall issue a written order,
24-16 appealable to the commission, that includes a description of the
24-17 legal basis for the decision. The decision may include
24-18 recommendations for policy changes by the commission.
24-19 (f) The commission may investigate, mediate, and resolve any
24-20 complaint submitted by a customer.
24-21 Sec. 2.307. FACILITY SEPARATION OR UNBUNDLING. (a) An
24-22 investor-owned electric utility may not sell electricity at
24-23 unregulated prices under this Act unless the utility first
24-24 structurally separates the utility's generation facilities,
24-25 operations, and services from the utility's transmission and
24-26 distribution facilities, operations, and services. The utility may
24-27 accomplish the required separation through divestiture, auction of
25-1 assets, or creation of a separate, nonaffiliated company.
25-2 (b) A municipally owned utility or an electric cooperative
25-3 corporation may not sell electricity at unregulated prices under
25-4 this Act unless the utility or cooperative first functionally
25-5 unbundles the utility's or cooperative's generation facilities,
25-6 operations, and services from the utility's or cooperative's
25-7 transmission and distribution facilities, operations, and services.
25-8 In addition, the commission may require a municipally owned
25-9 utility or electric cooperative corporation to structurally
25-10 separate the utility's or cooperative's facilities, operations, and
25-11 services in accordance with Subsection (a) of this section if the
25-12 commission determines that the separation is necessary.
25-13 (c) The commission by rule shall establish a code of conduct
25-14 that must be observed by:
25-15 (1) an electric or municipally owned utility;
25-16 (2) an affiliate; and
25-17 (3) the separated or unbundled facilities,
25-18 operations, and services of an electric or municipally owned
25-19 utility.
25-20 (d) The code of conduct established under Subsection (c) of
25-21 this section must, at a minimum, protect against abusive or
25-22 anticompetitive practices by an electric or municipally owned
25-23 utility, an affiliate, or the utility's unbundled or separated
25-24 facilities, operations, or services, including the sharing of
25-25 personnel, competitive information, or information systems, or
25-26 other anticompetitive practices.
25-27 (e) An electric or municipally owned utility that does not
26-1 separate or unbundle the utility's generation facilities,
26-2 operations, and services as provided by Subsection (a) or (b) of
26-3 this section remains a regulated electric utility under this Act to
26-4 the extent the utility was regulated on August 31, 1997. In
26-5 addition, notwithstanding any other provision of this Act, an
26-6 investor-owned electric utility that does not separate the
26-7 utility's generation facilities, operations, and services as
26-8 provided by Subsection (a) of this section may not under any
26-9 circumstances recover from the utility's customers:
26-10 (1) mark-ups, advertising expenses, civil penalties,
26-11 fines, or rate case expenses;
26-12 (2) any costs through a cost recovery factor,
26-13 including fuel, purchased power, or demand-side management costs;
26-14 (3) a rate of return that exceeds a return based on
26-15 the risk-free cost of capital; or
26-16 (4) any excess, unprotected, accumulated, deferred
26-17 income taxes.
26-18 (f) An investor-owned electric utility that is prohibited
26-19 from collecting any excess, unprotected, accumulated, deferred
26-20 income taxes under Subdivision (e)(4) of this section shall refund
26-21 those taxes to customers on September 1, 1997.
26-22 Sec. 2.308. RESTRUCTURING PLAN. (a) On or before January
26-23 1, 1998:
26-24 (1) each electric utility shall file a restructuring
26-25 plan with the commission providing for customer choice as
26-26 prescribed by this Act; and
26-27 (2) each municipally owned utility shall file a
27-1 restructuring plan with the municipality's governing body providing
27-2 for customer choice as prescribed by this Act.
27-3 (b) The restructuring plan must include:
27-4 (1) a detailed description of the method by which the
27-5 electric or municipally owned utility intends to separate or
27-6 unbundle the utility's electric generation and transmission and
27-7 distribution facilities, operations, and services;
27-8 (2) the methods by which the electric or municipally
27-9 owned utility will unbundle its existing rates;
27-10 (3) a description of the methods by which the electric
27-11 or municipally owned utility will educate and inform the utility's
27-12 customers about how the utility will give its customers the
27-13 opportunity to choose their supplier, including their energy
27-14 service provider or renewable power supplier;
27-15 (4) the steps the electric or municipally owned
27-16 utility will take to comply with the code of conduct established by
27-17 the commission under Section 2.307(c) of this Act;
27-18 (5) tariffs for transmission service and distribution
27-19 service;
27-20 (6) the electric or municipally owned utility's
27-21 recovery plan, if any, under Subtitle I or J of this Act, as
27-22 appropriate; and
27-23 (7) any other item the regulatory authority determines
27-24 is necessary.
27-25 (c) After an opportunity for a hearing, the commission or
27-26 the municipality's governing body, as appropriate, shall approve,
27-27 reject, or modify the electric or municipally owned utility's
28-1 restructuring plan.
28-2 Sec. 2.309. ANTITRUST LAWS; COMMISSION MONITORING. (a)
28-3 Each state and federal antitrust law applies to the sale of
28-4 electricity.
28-5 (b) The commission shall monitor electric utility and
28-6 affiliate activities and may require the submission of information
28-7 the commission determines is necessary to effectively monitor
28-8 business activities between a utility and the utility's affiliates.
28-9 If the commission finds that a utility or its affiliates have
28-10 engaged in anticompetitive or abusive practices, the commission
28-11 shall prepare a report with findings and recommendations for
28-12 investigation, prosecution, or other further actions and shall
28-13 forward the report to the state attorney general, the United States
28-14 Department of Justice, the United States Attorney General, or other
28-15 appropriate authority.
28-16 (c) Not later than January 15 of each odd-numbered year, the
28-17 commission shall report to the legislature the commission's
28-18 activities under this section and the final disposition of related
28-19 matters.
28-20 Sec. 2.310. MUNICIPAL FRANCHISES. A municipality may revise
28-21 a franchise agreement with an electric utility in effect on
28-22 September 1, 1997, to provide that the municipality will collect
28-23 the franchise fee allowed by the agreement from the local
28-24 distribution utility within the municipality. The fee must be a
28-25 percentage based on gross receipts and must provide the
28-26 municipality with the same level of revenue as the municipality
28-27 received under the franchise agreement in effect on August 31,
29-1 1997.
29-2 Sec. 2.311. INTERFERENCE WITH CONTRACT. A provision of this
29-3 Act may not interfere with the rights of a party under a contract,
29-4 including a retail customer that has a contract with an electric
29-5 utility on August 31, 1997.
29-6 SECTION 11. Title II, Public Utility Regulatory Act of 1995
29-7 (Article 1446c-0, Vernon's Texas Civil Statutes), is amended by
29-8 adding Subtitle H to read as follows:
29-9 SUBTITLE H. UNIVERSAL SERVICE
29-10 Sec. 2.351. APPLICATION. Except as otherwise provided by
29-11 this subtitle, this subtitle does not apply to an electric
29-12 cooperative corporation that has not elected to provide customer
29-13 choice under this Act or to the customers of that cooperative.
29-14 Sec. 2.352. DISTRIBUTION SERVICE. (a) An electric utility,
29-15 including a municipally owned utility, in existence on September 1,
29-16 1997, retains all rights and obligations prescribed by this Act to
29-17 provide electric transmission and local distribution service in the
29-18 utility's certificated service area as it existed on August 31,
29-19 1997.
29-20 (b) The electric or municipally owned utility shall transmit
29-21 and distribute electricity and implement all customer service
29-22 programs prescribed by this Act or directed by the regulatory
29-23 authority.
29-24 (c) Each local distribution utility shall:
29-25 (1) connect to its system and deliver electricity to
29-26 all retail customers located in the utility's certificated service
29-27 area; and
30-1 (2) establish just and reasonable rates for service in
30-2 accordance with this Act.
30-3 (d) Notwithstanding Subsection (c) of this section, an
30-4 electric cooperative corporation that has elected to be exempt from
30-5 rate regulation under Section 2.2011 of this Act shall continue to
30-6 comply with that section in establishing rates for distribution
30-7 service.
30-8 (e) A local distribution utility shall provide distribution
30-9 service at uniform rates, terms of access, and conditions that, at
30-10 a minimum, are comparable to the rates, terms of access, and
30-11 conditions of the utility's or its affiliate's use of its system.
30-12 The regulatory authority shall ensure that local distribution
30-13 utilities provide nondiscriminatory access to distribution service
30-14 for all entities, including retail customers, power merchants,
30-15 qualifying facilities, exempt wholesale generators, power
30-16 marketers, and electric utilities.
30-17 (f) Not later than January 1, 1998, each local distribution
30-18 utility shall file amended tariffs implementing this section with
30-19 the appropriate regulatory authority having jurisdiction over the
30-20 distribution service of the utility.
30-21 Sec. 2.353. DESIGNATED SUPPLIER. (a) The commission by
30-22 rule shall provide for the competitive selection of at least one
30-23 designated supplier for each certificated service area of an
30-24 electric utility to ensure that all customers, including rural and
30-25 low-income customers, have access to reliable, reasonably priced
30-26 electricity.
30-27 (b) A licensed power merchant may bid to become a designated
31-1 supplier.
31-2 (c) If the commission determines that there are no adequate
31-3 bidders to become the designated supplier for a service area, the
31-4 commission shall require each power merchant operating in that area
31-5 to serve a portion of the customers who do not choose an
31-6 electricity supplier in proportion to the power merchant's
31-7 kilowatt-hour retail sales in that service area. A power merchant
31-8 that is required to be a designated supplier may not charge for
31-9 that service rates that are higher than the rates charged to other
31-10 similar customers in the same area.
31-11 (d) The commission shall review the selection of a
31-12 designated supplier every two years.
31-13 Sec. 2.354. SERVICE BY DESIGNATED SUPPLIER IN EVENT OF POWER
31-14 MERCHANT FAILURE. The designated supplier shall serve the
31-15 customers of a power merchant that fails to meet the merchant's
31-16 contractual obligations. The commission shall establish a
31-17 settlement procedure between the designated supplier and the power
31-18 merchant.
31-19 Sec. 2.355. CHOICE OF POWER MERCHANT. A customer may leave
31-20 the designated supplier and choose a power merchant after giving
31-21 three days notice to the designated supplier.
31-22 Sec. 2.356. ESTABLISHMENT OF UNIVERSAL SERVICE AND
31-23 ENVIRONMENTAL IMPROVEMENT FUND. (a) A statewide universal service
31-24 and environmental improvement fund is established outside the state
31-25 treasury to ensure:
31-26 (1) universal service;
31-27 (2) payment assistance for low-income customers; and
32-1 (3) encouragement for the development of renewable
32-2 resources and demand-side management programs.
32-3 (b) The level of revenues in the fund must be at least equal
32-4 to the amount of revenues collected from retail utility customers
32-5 in rates in existence on September 1, 1997, for low-income customer
32-6 payment assistance, demand-side management programs, and renewable
32-7 resources. Each utility shall identify the revenues collected from
32-8 customers in rates in existence on September 1, 1997, in the
32-9 utility's restructuring plan filed under Section 2.308 of this
32-10 Act.
32-11 (c) The commission shall adopt rules for the implementation
32-12 and administration of the fund and shall seek input from community
32-13 action agencies and other interested parties.
32-14 Sec. 2.357. FEE. (a) The commission shall collect revenues
32-15 for the fund established under this subtitle by imposing a fee on
32-16 each power merchant and electric utility selling electricity,
32-17 including an electric cooperative corporation that has not elected
32-18 to provide customer choice. The fee is based on the retail
32-19 electric sales revenues received by the power merchant or electric
32-20 utility selling electricity. The commission shall begin collecting
32-21 the fee January 1, 2001.
32-22 (b) The commission may increase the fee if necessary. The
32-23 commission may not increase the fee by an amount that would result
32-24 in the collection of revenue that exceeds the revenue levels in
32-25 place by more than 10 percent. Notwithstanding this increase, a
32-26 customer's total base rates in place on January 1, 1998, as reduced
32-27 under Section 2.2115 of this Act, may not increase during the
33-1 applicable recovery period.
33-2 Sec. 2.358. USE OF FUND. (a) The commission shall ensure
33-3 that low-income programs, including payment assistance and
33-4 low-income demand-side management programs such as targeted energy
33-5 conservation, weatherization, and energy audit programs receive not
33-6 less than 50 percent of the total amount of revenues in the fund on
33-7 an annual basis.
33-8 (b) The remaining amount in the fund may also be used to
33-9 encourage the development of renewable resources and demand-side
33-10 management programs.
33-11 (c) The commission shall discontinue collecting revenue for
33-12 the encouragement of the development of renewable resources on the
33-13 earlier of:
33-14 (1) January 1, 2005; or
33-15 (2) the date on which the commission finds that the
33-16 renewable resources are competitive.
33-17 SECTION 12. Title II, Public Utility Regulatory Act of 1995
33-18 (Article 1446c-0, Vernon's Texas Civil Statutes), is amended by
33-19 adding Subtitle I to read as follows:
33-20 SUBTITLE I. RECOVERY OF UNECONOMIC INVESTMENTS
33-21 BY INVESTOR-OWNED UTILITY
33-22 Sec. 2.401. APPLICATION OF SUBTITLE. This subtitle applies
33-23 only to an investor-owned electric utility.
33-24 Sec. 2.402. COMPUTATION OF UNECONOMIC UTILITY INVESTMENTS.
33-25 (a) Uneconomic utility investments of an electric utility are
33-26 computed based on the difference between:
33-27 (1) the value of all of the utility's
34-1 generation-related assets that have an asset book value equal to or
34-2 above their market value; and
34-3 (2) the value of all of the utility's
34-4 generation-related assets that have an asset book value below their
34-5 market value, after prudent, thorough, and aggressive mitigation
34-6 efforts by the utility.
34-7 (b) In determining the difference, the commission shall
34-8 include the investments of all electric subsidiaries and operating
34-9 companies regulated by the commission that are owned by electric
34-10 utility holding companies in existence when the uneconomic utility
34-11 investments were made.
34-12 Sec. 2.403. CERTAIN EXPENSES NOT RECOVERABLE. An electric
34-13 utility may not recover uneconomic utility investments from a
34-14 customer for:
34-15 (1) a loss of revenue due to the exercise of
34-16 competitive alternatives that were available before September 1,
34-17 1997, including:
34-18 (A) demand-side management;
34-19 (B) energy conservation measures;
34-20 (C) cogeneration or self-generation;
34-21 (D) termination or reduction of operations; or
34-22 (E) customers moving from the service area; or
34-23 (2) any other revenue reduction attributable to a
34-24 cause other than the availability of customer choice under this
34-25 Act.
34-26 Sec. 2.404. DUTY TO MITIGATE. An electric utility has the
34-27 duty to aggressively mitigate any uneconomic utility investments.
35-1 Mitigation measures may include:
35-2 (1) increased efficiency;
35-3 (2) reduction of expenses;
35-4 (3) revenue enhancements such as aggressive marketing
35-5 of excess capacity;
35-6 (4) refinancing of existing debt; and
35-7 (5) retirement, sale, or accelerated depreciation of
35-8 uneconomic assets, including regulatory assets.
35-9 Sec. 2.405. PREREQUISITES TO RECOVERY. (a) An electric
35-10 utility may not recover any uneconomic utility investments under
35-11 this subtitle unless the utility:
35-12 (1) structurally separates the utility's generation
35-13 facilities, operations, and services from the utility's
35-14 transmission and distribution facilities, operations, and services
35-15 as provided by Section 2.307(a) of this Act; and
35-16 (2) files a recovery plan as part of the restructuring
35-17 plan required by Section 2.308 of this Act on or before January 1,
35-18 1998.
35-19 (b) The recovery plan must include:
35-20 (1) a description of the utility's proposed mitigation
35-21 efforts;
35-22 (2) the mechanisms by which the uneconomic utility
35-23 investments will be shared between customers and shareholders in
35-24 accordance with this subtitle;
35-25 (3) information relating to the nonbypassable
35-26 competitive transition charge authorized by Section 2.408 of this
35-27 Act;
36-1 (4) information that clearly identifies for each
36-2 customer class the portion of existing rates that constitutes
36-3 uneconomic utility investments; and
36-4 (5) any other information the commission determines is
36-5 necessary.
36-6 Sec. 2.406. ACTION ON RESTRUCTURING AND RECOVERY PLAN. (a)
36-7 After a full contested case hearing conducted under Chapter 2001,
36-8 Government Code, the commission shall approve, modify and approve,
36-9 or reject the restructuring plan and recovery plan, if any.
36-10 (b) The commission shall approve a plan if it finds that the
36-11 plan is consistent with this Act and is equitable, reasonable, and
36-12 necessary. In making that determination, the commission shall, at
36-13 a minimum, examine:
36-14 (1) the extent to which nonmitigatable uneconomic
36-15 utility investments can be attributed to identifiable legislative
36-16 or regulatory mandates;
36-17 (2) the extent to which the utility's plan includes
36-18 all reasonable mitigation mechanisms;
36-19 (3) the reasonableness of the proposed sharing
36-20 mechanism; and
36-21 (4) the reasonableness of the proposed nonbypassable
36-22 competitive transition charge.
36-23 Sec. 2.407. RECOVERY OF UNECONOMIC INVESTMENTS. (a) The
36-24 customers and shareholders of an electric utility subject to this
36-25 subtitle shall share equitably the utility's uneconomic
36-26 investments, as determined by the commission. The commission shall
36-27 consider the rate reduction required by Section 2.2115 of this Act
37-1 in determining the appropriate cost sharing between customers and
37-2 shareholders.
37-3 (b) This Act is not intended to provide a greater
37-4 opportunity for recovery of uneconomic utility investments than is
37-5 available under any applicable law or regulation in existence on
37-6 August 31, 1997.
37-7 (c) Recovery of a portion of an uneconomic utility
37-8 investment may not be conditioned on the continued operation of a
37-9 generating plant.
37-10 Sec. 2.408. RECOVERY FROM CUSTOMERS. (a) The customers'
37-11 portion of uneconomic utility investments may be collected only:
37-12 (1) during the utility's recovery period; and
37-13 (2) through a nonbypassable competitive transition
37-14 charge.
37-15 (b) The charge must be stated separately on each customer's
37-16 bill.
37-17 (c) The charge shall be computed for each customer and may
37-18 not be higher than the amount of uneconomic utility investments
37-19 identified in the rates for that customer at the time the charge is
37-20 imposed.
37-21 (d) An electric utility may not impose a competitive
37-22 transition charge against:
37-23 (1) a qualifying facility;
37-24 (2) a person who furnishes electricity only to itself
37-25 or its tenants and is therefore not included in the definition of
37-26 "public utility" under Section 2.0011(1)(F)(i) of this Act; or
37-27 (3) a person who moves away from the utility's service
38-1 area.
38-2 (e) Except as provided by Subsection (d) of this section,
38-3 each utility customer in the electric utility's service area,
38-4 regardless of whether the customer chooses a power merchant or a
38-5 designated supplier, shall pay the charge to the utility.
38-6 (f) The computation of the charge may not, for any class of
38-7 customers, cause the total base rates of that class, including
38-8 rates for generation, transmission, or distribution service, to
38-9 exceed the total base rates paid by that class on January 1, 1998,
38-10 as reduced as required by Section 2.2115 of this Act.
38-11 Sec. 2.409. USE OF EXIT FEES. An electric utility may not
38-12 collect an exit fee as a method for recovering uneconomic utility
38-13 investments unless the customer agrees to pay the fee.
38-14 Sec. 2.410. USE OF TRANSITION CHARGE. An electric utility
38-15 may use amounts collected through the nonbypassable competitive
38-16 transition charge only to reduce the level of the utility's
38-17 uneconomic utility investments.
38-18 Sec. 2.411. RECONCILIATION. (a) At the conclusion of the
38-19 recovery period, the electric utility shall file for a
38-20 reconciliation of the utility's:
38-21 (1) anticipated uneconomic utility investments
38-22 approved by the commission under Section 2.406 of this Act; and
38-23 (2) actual incurred uneconomic utility investments.
38-24 (b) An electric utility that recovers an amount greater than
38-25 the utility's actual incurred uneconomic utility investments shall
38-26 refund the excess amounts collected to customers.
38-27 (c) In determining whether the utility has recovered an
39-1 amount greater than the utility's actual incurred uneconomic
39-2 utility investments, the commission shall consider:
39-3 (1) the extent to which the utility thoroughly and
39-4 aggressively mitigated its uneconomic utility investments; and
39-5 (2) the actual level of sharing of the costs between
39-6 the customers and the utility.
39-7 SECTION 13. Title II, Public Utility Regulatory Act of 1995
39-8 (Article 1446c-0, Vernon's Texas Civil Statutes), is amended by
39-9 adding Subtitle J to read as follows:
39-10 SUBTITLE J. RECOVERY OF UNECONOMIC INVESTMENTS BY ELECTRIC
39-11 COOPERATIVE OR MUNICIPALLY OWNED UTILITY
39-12 Sec. 2.451. APPLICATION OF SUBTITLE; DEFINITIONS. (a) This
39-13 subtitle applies only to:
39-14 (1) a municipally owned utility; and
39-15 (2) an electric cooperative corporation that has
39-16 elected to provide customer choice.
39-17 (b) In this subtitle:
39-18 (1) "Electric utility" includes a municipally owned
39-19 utility.
39-20 (2) "Regulatory authority" means:
39-21 (A) the commission, as applied to an electric
39-22 cooperative corporation; and
39-23 (B) the governing body of the municipality, as
39-24 applied to a municipally owned utility.
39-25 Sec. 2.452. COMPUTATION OF UNECONOMIC UTILITY INVESTMENTS.
39-26 The uneconomic utility investments of an electric utility are
39-27 computed in accordance with Section 2.402 of this Act.
40-1 Sec. 2.453. CERTAIN EXPENSES NOT RECOVERABLE. An electric
40-2 utility may not recover uneconomic utility investments from a
40-3 customer for:
40-4 (1) a loss of revenue due to the exercise of
40-5 competitive alternatives that were available before September 1,
40-6 1997, including:
40-7 (A) demand-side management;
40-8 (B) energy conservation measures;
40-9 (C) cogeneration or self-generation;
40-10 (D) termination or reduction of operations; or
40-11 (E) customers moving from the service area; or
40-12 (2) any revenue reduction attributable to
40-13 incrementally priced tariffs, including cogeneration or
40-14 self-generation deferral or avoidance rates or economic development
40-15 rates.
40-16 Sec. 2.454. DUTY TO MITIGATE. An electric utility has the
40-17 duty to aggressively mitigate any uneconomic utility investments.
40-18 Mitigation measures may include:
40-19 (1) reduction of expenses;
40-20 (2) revenue enhancements such as aggressively
40-21 marketing surplus capacity;
40-22 (3) refinancing of existing debt; and
40-23 (4) offering a broad range of rate and service options
40-24 for all retail customers.
40-25 Sec. 2.455. PREREQUISITES TO RECOVERY. (a) An electric
40-26 utility may not recover any uneconomic utility investments under
40-27 this subtitle unless the utility files a recovery plan as part of
41-1 the restructuring plan required by Section 2.308 of this Act on or
41-2 before January 1, 1998.
41-3 (b) The recovery plan must fully demonstrate and describe
41-4 the utility's:
41-5 (1) proposed computation of uneconomic utility
41-6 investments;
41-7 (2) mitigation efforts; and
41-8 (3) proposed competitive transition charge.
41-9 (c) Notwithstanding any other provision of this Act, a
41-10 generation and transmission electric cooperative corporation or a
41-11 river authority that serves a distribution electric cooperative
41-12 corporation or municipally owned utility subject to this subtitle
41-13 may file a recovery plan under this subtitle as necessary.
41-14 Sec. 2.456. ACTION ON RESTRUCTURING PLAN AND RECOVERY PLAN.
41-15 (a) The regulatory authority shall approve, modify and approve, or
41-16 reject the restructuring plan and recovery plan, if any.
41-17 (b) The regulatory authority shall approve a plan if it
41-18 finds that the plan is consistent with this Act or other applicable
41-19 law and is equitable, reasonable, and necessary. In making that
41-20 determination, the regulatory authority shall, at a minimum,
41-21 examine the extent to which the utility has proposed or pursued all
41-22 reasonable mitigation mechanisms.
41-23 (c) If the regulatory authority approves the plan, the
41-24 regulatory authority shall determine a reasonable and necessary
41-25 recovery period for the electric utility and shall set the
41-26 utility's nonbypassable competitive transition charge. The
41-27 recovery period must be sufficient to provide the utility a
42-1 reasonable opportunity to fully recover the utility's uneconomic
42-2 utility investments subject to the mitigation requirements
42-3 prescribed by Section 2.454 of this Act.
42-4 (d) If the plan is proposed by an electric cooperative
42-5 corporation, the commission shall, on the written request of any
42-6 affected party, conduct a full contested case hearing on the plan
42-7 under Chapter 2001, Government Code.
42-8 (e) If the plan is proposed by a municipally owned utility,
42-9 any affected party may appeal the decision of the municipality's
42-10 governing body by submitting a written petition for review to the
42-11 commission not later than the 30th day after the date of the final
42-12 decision by the governing body. The commission shall stay the
42-13 decision of the regulatory authority pending the outcome of the
42-14 appeal.
42-15 (f) An appeal to the commission under Subsection (e) of this
42-16 section is de novo. In the appeal, the commission shall review the
42-17 methods the municipally owned utility used to unbundle its rates,
42-18 the utility's mitigation efforts, the computation and
42-19 quantification of uneconomic utility investments, and the
42-20 development and reasonableness of the nonbypassable competitive
42-21 transition charge. On the written request of any party to the
42-22 appeal proceeding, the commission shall conduct a full contested
42-23 case hearing under Chapter 2001, Government Code, to determine all
42-24 disputed issues.
42-25 Sec. 2.457. RECOVERY OF UNECONOMIC INVESTMENTS. (a) An
42-26 electric utility may recover uneconomic utility investments only:
42-27 (1) during the recovery period established
43-1 specifically for that utility under Section 2.456 of this Act; and
43-2 (2) through a nonbypassable competitive transition
43-3 charge.
43-4 (b) The charge must be stated separately on each customer's
43-5 bill.
43-6 (c) The charge shall be computed for each customer class and
43-7 may not be higher than the amount of uneconomic utility investments
43-8 identified in the rates for that class at the time the charge is
43-9 imposed.
43-10 (d) An electric utility may not impose a charge against:
43-11 (1) a qualifying facility;
43-12 (2) a person who furnishes electricity only to itself
43-13 or its tenants and is therefore not included in the definition of
43-14 "public utility" under Section 2.0011(1)(F)(i) of this Act; or
43-15 (3) a person who moves away from the utility's service
43-16 area.
43-17 (e) Except as provided by Subsection (d) of this section,
43-18 each electric utility customer in the electric utility's service
43-19 area, regardless of whether the customer chooses a power merchant
43-20 or a designated supplier, shall pay the charge to the utility.
43-21 (f) The computation of the charge may not, for any class of
43-22 customers, cause the total base rates of that class, including
43-23 rates for generation, transmission, or distribution service, to
43-24 exceed the total base rates paid by that class on September 1,
43-25 1997.
43-26 (g) This Act is not intended to provide a greater
43-27 opportunity for recovery of uneconomic utility investments than is
44-1 available under any applicable law or regulation in existence on
44-2 August 31, 1997.
44-3 Sec. 2.458. USE OF EXIT FEES. An electric utility may not
44-4 collect an exit fee as a method for recovering uneconomic utility
44-5 investments unless the customer agrees to pay the fee.
44-6 Sec. 2.459. USE OF TRANSITION CHARGE. An electric utility
44-7 may use amounts collected under this section only to reduce the
44-8 level of the utility's debt or other obligations associated with
44-9 the utility's uneconomic utility investments.
44-10 Sec. 2.460. RECONCILIATION. (a) At the conclusion of the
44-11 recovery period, the electric utility shall file for a
44-12 reconciliation of the utility's:
44-13 (1) anticipated uneconomic utility investments
44-14 approved by the regulatory authority under Section 2.456 of this
44-15 Act; and
44-16 (2) actual incurred uneconomic utility investments.
44-17 (b) An electric utility that recovers an amount greater than
44-18 the utility's actual incurred uneconomic utility investments shall
44-19 refund the excess amounts collected to customers.
44-20 (c) In determining whether the utility has collected an
44-21 amount greater than the utility's actual incurred uneconomic
44-22 utility investment, the commission shall consider the extent to
44-23 which the utility thoroughly and aggressively mitigated its
44-24 uneconomic utility investments.
44-25 SECTION 14. Subtitle F, Title II, Public Utility Regulatory
44-26 Act of 1995 (Article 1446c-0, Vernon's Texas Civil Statutes), is
44-27 amended by adding Section 2.2511 to read as follows:
45-1 Sec. 2.2511. APPLICATION TO POWER MERCHANT. (a) For
45-2 purposes of this subtitle only, "retail public utility" does not
45-3 include a power merchant.
45-4 (b) Notwithstanding any other provision of this Act, the
45-5 commission may not directly or indirectly regulate the wholesale or
45-6 retail territory of or rates charged by a power merchant.
45-7 SECTION 15. This Act takes effect September 1, 1997.
45-8 SECTION 16. The importance of this legislation and the
45-9 crowded condition of the calendars in both houses create an
45-10 emergency and an imperative public necessity that the
45-11 constitutional rule requiring bills to be read on three several
45-12 days in each house be suspended, and this rule is hereby suspended.