By: Madla, et al. S.B. No. 1571
A BILL TO BE ENTITLED
AN ACT
1-1 relating to ratemaking proceedings for certain utilities.
1-2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-3 SECTION 1. Section 2.105, Public Utility Regulatory Act of
1-4 1995 (Article 1446c-0, Vernon's Texas Civil Statutes), is amended
1-5 by adding Subsection (d) to read as follows:
1-6 (d) Notwithstanding any other provisions of this Act to the
1-7 contrary, in any ratemaking proceeding pertaining to a municipally
1-8 owned utility, the utility may elect, in its sole discretion, to
1-9 use a cash flow method for determining appropriate rates instead of
1-10 the standard rate of return method used to determine rates for
1-11 investor-owned utilities. If the utility elects the cash flow
1-12 method, the commission shall apply ratemaking principles based on
1-13 the flow of funds set forth in the municipality's revenue bond
1-14 ordinance and other debt ordinances to allow for a cash flow level
1-15 sufficient to cover all items determined by the municipally owned
1-16 utility's governing board to be required to be paid or funded from
1-17 revenues, including the annual cost of operating and maintaining
1-18 the systems, annual payments of debt service, reserve requirements
1-19 and debt expense on long-term and short-term debt, annual payments
1-20 for transfers to the city's general fund, and annual payments to
1-21 provide adequate internally generated funds for construction and
1-22 other system needs deposited in the construction or the repair and
1-23 replacement fund. In a wholesale transmission rate proceeding for
2-1 such a municipally owned utility, the commission shall ensure that
2-2 costs of nontransmission functions are not allocated to third-party
2-3 wholesale transmission users and that no more than a proportionate
2-4 part of the transfer to the municipality's general fund, based on
2-5 transmission investment, is allocated to third-party wholesale
2-6 transmission users. If the cash flow method is used, the
2-7 commission may not consider historic test year, rate base, rate of
2-8 return, depreciation accounting, or other cost-of-service
2-9 ratemaking principles applicable to investor-owned utilities. In
2-10 its implementation of this subsection, the commission shall
2-11 specifically acknowledge that provisions contained in Sections
2-12 2.151, 2.203, 2.205, 2.206, and 2.208 of this Act do not apply to
2-13 municipally owned utilities.
2-14 SECTION 2. This Act takes effect September 1, 1997.
2-15 SECTION 3. The importance of this legislation and the
2-16 crowded condition of the calendars in both houses create an
2-17 emergency and an imperative public necessity that the
2-18 constitutional rule requiring bills to be read on three several
2-19 days in each house be suspended, and this rule is hereby suspended.
2-20 COMMITTEE AMENDMENT NO. 1
2-21 Amend S.B. No. 1571, by adding a new SECTION 1 to read as
2-22 follows and renumbering all succeeding sections accordingly:
2-23 SECTION 1. Subsection (c), Section 2.057, Public Utility
2-24 Regulatory Act of 1995 (Article 1446c-0, Vernon's Texas Civil
2-25 Statutes), is amended to read as follows:
3-1 (c) To the extent a utility provides transmission of
3-2 electric energy at the request of a third party, the commission
3-3 shall ensure that the costs of the transmission are not borne by
3-4 the utility's other customers by requiring the utility to recover
3-5 from the entity for which transmission is provided all reasonable
3-6 costs incurred by the utility in providing transmission services
3-7 necessary for the transaction. The commission may not employ a
3-8 transmission pricing method that:
3-9 (1) uses a statewide load-ratio pricing methodology;
3-10 (2) causes a transmission customer to share in the
3-11 cost of all or a portion of a utility's transmission system that:
3-12 (A) is not actually used by the transmission
3-13 customer for the transmission of wholesale power and energy; or
3-14 (B) is affected by the transmission customer's
3-15 use of the statewide transmission grid for the transmission of
3-16 wholesale power and energy but is not required by the transmission
3-17 customer for the transmission of wholesale power and energy; or
3-18 (3) produces cost shifting when measured by a
3-19 utility's use of transmission facilities owned by others in
3-20 comparison to others' use of its transmission system.
3-21 Carter