By: West S.B. No. 1721
Line and page numbers may not match official copy.
Bill not drafted by TLC or Senate E&E.
A BILL TO BE ENTITLED
AN ACT
1-1 relating to ensuring that customers receive reliable and affordable
1-2 electric energy services.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Title II, Public Utility Regulatory Act of 1995
1-5 (Article 1446c-0, Vernon's Texas Civil Statutes), is amended by
1-6 adding Subtitle G to read as follows:
1-7 SUBTITLE G. CUSTOMER SAFEGUARDS
1-8 Sec. 2.301. APPLICATION AND IMPLEMENTATION OF SUBTITLE.
1-9 (a) This subtitle prescribes basic rights and protections for
1-10 electric utility customers, including residential customers.
1-11 (b) This subtitle does not affect a right or protection an
1-12 electric utility customer has under another provision of this Act
1-13 or under other law.
1-14 (c) This subtitle applies without exception to a retail
1-15 electric utility regardless of whether the utility is a monopoly,
1-16 is transitioning to a competitive regulatory environment, or is a
1-17 provider in a competitive retail electric market.
1-18 (d) The commission shall adopt rules to implement and
1-19 enforce this subtitle.
1-20 Sec. 2.302. EQUAL OPPORTUNITY FOR BENEFIT. (a) The
1-21 commission shall ensure all of its rules and policies treat all
2-1 customers and all customer classes equitably and fairly.
2-2 (b) In implementing and enforcing this section, the
2-3 commission shall ensure that:
2-4 (1) service choices and discounted rates are available
2-5 to all customers and customer classes;
2-6 (2) captive, residential customers are not required to
2-7 pay costs avoided by other customers;
2-8 (3) customer choices are broadened to include other
2-9 types of electric energy services, such as demand-side management,
2-10 solar and wind energy, cost-effective substitution of electric
2-11 energy with alternative fuels, green marketing, and renewable
2-12 energy line extension alternatives; and
2-13 (4) reasonable financial reimbursement from the
2-14 utility or utilities engaged in the proceeding for active
2-15 participation by nonprofit and low-income consumer groups and
2-16 environmental groups in a commission proceeding in which:
2-17 (A) the financial needs of the groups are small
2-18 in comparison to the potential benefits of their participation; and
2-19 (B) the participation of the groups is necessary
2-20 to fully represent a legitimate viewpoint in the proceeding.
2-21 Sec. 2.303. UNIVERSAL SERVICE. (a) Electricity is an
2-22 essential service necessary for health and safety and each resident
2-23 of this state is entitled to basic electric utility service at a
2-24 reasonable price.
2-25 (b) In implementing this section, the commission shall
3-1 ensure that:
3-2 (1) universal electric utility service, including an
3-3 affordable basic service package, is available to all residential
3-4 electric utility customers, including low-income customers;
3-5 (2) universal service requirements and provisions
3-6 address all necessary issues, including:
3-7 (A) protections relating to obligation to serve;
3-8 (B) identification of a provider of last resort
3-9 in each service area;
3-10 (C) universally affordable rates;
3-11 (D) provision of a basic service package of firm
3-12 electric services for all customers, whether urban or rural, that:
3-13 (i) provides a block of kilowatt hours
3-14 sufficient to provide lighting, refrigeration, heating, and
3-15 cooling, as determined by the commission, based on a 10-year
3-16 average for residential electricity use in a comparable dwelling in
3-17 the county;
3-18 (ii) is offered at a price that does not
3-19 vary by time of day or season; and
3-20 (iii) has no associated administrative fee
3-21 or fixed fee;
3-22 (E) access to basic weatherization and energy
3-23 audit services; and
3-24 (F) provision of a levelized payment plan
3-25 available to all customers that allows customers to make timely and
4-1 consistent payments of the total amount owed;
4-2 (3) a transmission or distribution utility is required
4-3 to provide transmission or distribution service to each customer in
4-4 the area served by the utility; and
4-5 (4) low-income customers have access to payment
4-6 programs, targeted energy conservation and weatherization programs,
4-7 and special rate structures such as lifeline rates.
4-8 (c) The commission shall adopt a competitively neutral
4-9 funding mechanism to ensure that low-income customers have access
4-10 to the basic service package. The commission shall impose an
4-11 assessment against each electricity utility generator doing
4-12 business in this state to ensure that assistance is provided to
4-13 households with incomes at or below 125 percent of the federal
4-14 poverty guidelines and to ensure that a household does not pay more
4-15 than five percent of the household's total household income for the
4-16 basic service package. The commission shall impose the assessment
4-17 based on kilowatt hours sold. The commission shall attempt to
4-18 streamline program delivery and enrollment procedures by
4-19 coordinating with state human services agencies and low-income
4-20 weatherization providers.
4-21 Sec. 2.304. CONSUMER PROTECTIONS. (a) Each electric energy
4-22 customer, regardless of service provider, is entitled, at a
4-23 minimum, to have customer service standards and consumer
4-24 protections at least as strong as those in effect on the effective
4-25 date of this section.
5-1 (b) The commission shall ensure that each customer has, at a
5-2 minimum:
5-3 (1) access to customer service offices;
5-4 (2) sufficient unbiased information on which to make
5-5 decisions, including information relating to service and pricing
5-6 options that is clear, accurate, written in plain language, and
5-7 available in English or Spanish;
5-8 (3) accurate and understandable bills;
5-9 (4) disclosure of unbundled cost and price;
5-10 (5) disclosure of fuel mix and generation profile of
5-11 the service provider;
5-12 (6) notice of risk of fuel price volatility;
5-13 (7) access to a provider's complaint history;
5-14 (8) protection against service disconnection in
5-15 extreme weather conditions, in cases of medical necessity, or in
5-16 cases of nonpayment for unrelated services;
5-17 (9) adequate notice of a proposed service termination,
5-18 a change in the quality of service, or a change in the price of
5-19 service;
5-20 (10) the right to quickly resolve service and billing
5-21 problems and the right to appeal an unfair utility action to an
5-22 impartial regulator and to have a complaint resolved quickly
5-23 through a simplified hearings process; and
5-24 (11) protection against abusive or anti-competitive
5-25 practices, including rules relating to:
6-1 (A) credit and collection practices, connection
6-2 and reconnection, repair, complaint handling, and billing;
6-3 (B) deposit requirements;
6-4 (C) disconnection policies;
6-5 (D) the form and content of bills;
6-6 bill payments.
6-7 (c) In implementing and enforcing the protections required
6-8 by Subsection (b) of this section, the commission shall ensure that
6-9 downsizing and layoffs do not result in customer inconvenience and
6-10 service delays.
6-11 (d) Each consumer is entitled to have information about
6-12 customer billing, payment, and usage history kept strictly
6-13 confidential. An electric utility or other person may aggregate
6-14 information in a manner that masks the usage, billing, and payment
6-15 history of an individual consumer. Nonaggregated information may
6-16 be released only with the express written consent of the customer
6-17 in accordance with procedures adopted by the commission. In
6-18 addition, the commission shall adopt nondiscriminatory rules
6-19 regarding telemarketing calls relating to retail electric service.
6-20 (e) Each consumer is entitled to fair and reasonable
6-21 marketing, sales, and business practices. The commission may bring
6-22 an action under Subchapter E, Chapter 17, Business & Commerce Code,
6-23 if an allegedly false, misleading, or deceptive act or practice
6-24 involves a good or service that is related to electricity. A
6-25 consumer must notify the commission if the consumer brings an
7-1 action under Subchapter E, Chapter 17, Business & Commerce Code,
7-2 against an electric provider who is under the commission's
7-3 jurisdiction.
7-4 (f) If competitive choices or the number of retail electric
7-5 providers in a market increase, either by state or federal action
7-6 or because of changing market conditions, the commission shall
7-7 adopt any additional rules relating to billing, business practices,
7-8 consumer choice of service provider, and service quality as the
7-9 commission considers necessary and consistent with this subtitle.
7-10 The commission shall also adopt and enforce standards for licensing
7-11 electric service providers in this state to ensure that the
7-12 providers are financially stable and have not violated the laws or
7-13 regulations of other states.
7-14 Sec. 2.305. PROTECTION AGAINST MARKET FAILURE. (a) The
7-15 commission shall ensure that the electric energy market is fair to
7-16 both consumers and to companies operating in the market.
7-17 (b) The commission shall adopt safeguards to prevent:
7-18 (1) anti-competitive behavior such as favoritism,
7-19 self-dealing, and cross-subsidization among affiliates;
7-20 (2) anti-competitive domination in a geographic area
7-21 or service market or sub-market in which a limited number of
7-22 competitors, either along or in combination, may, by reason of
7-23 their market share or other inherent advantage, exercise
7-24 substantial control over the prevailing market price;
7-25 (3) cross-subsidization between competitive and
8-1 noncompetitive services;
8-2 (4) action, including but not limited to unreasonable
8-3 tying arrangement and anti-competitive contracts, which may act as
8-4 unreasonable barriers to the entry of competing suppliers;
8-5 (5) holding company practices, including but not
8-6 limited to corporate tax allocation, sharing of services, and
8-7 transfers of assets, whether tangible or intangible, which enable
8-8 an electric utility's unregulated affiliate to gain an advantage
8-9 over its competitors based upon its affiliation with the electric
8-10 utility; and
8-11 (6) affiliated electric and gas utilities which
8-12 service the same service area from engaging in collusive pricing
8-13 behavior.
8-14 (c) The commission may:
8-15 (1) develop procedures to investigate and take action
8-16 against anti-competitive behavior;
8-17 (2) provide commission staff with appropriate training
8-18 in anti-trust law; and
8-19 (3) apply any condition or limitation on a merger or
8-20 acquisition within its jurisdiction to the extent that the
8-21 commission finds that the condition or limitation is reasonably
8-22 necessary to protect ratepayers, promote competition, or prevent
8-23 anti-competitive actions.
8-24 (d) The commission shall take such actions as necessary to
8-25 enforce and achieve remedial compliance with the provisions of this
9-1 section. The commission may order one or more of the following
9-2 sanctions against a person or firm within its jurisdiction if the
9-3 commission determines from the facts that such would be fair,
9-4 reasonable or equitable:
9-5 (1) cancel or suspend any permit, license,
9-6 certificate, or registration existing under its authority;
9-7 (2) enter an administrative penalty in according with
9-8 the provisions of this Act;
9-9 (3) order the person or firm to cease and desist from
9-10 the specified activity;
9-11 (4) direct the person or firm to make complete
9-12 restitution to all Texas consumers and entities operating in Texas
9-13 harmed by violation of this section;
9-14 (5) modify any rate schedules within the commission's
9-15 jurisdiction to the extent such modification is reasonably related
9-16 to compliance with the section; and
9-17 (6) forbid the person or firm from merging with or
9-18 acquiring any electric utility without the approval of the
9-19 commission.
9-20 (e) For purposes of Subsection (b)(2), a sub-market includes
9-21 electric services provided to particular classes of customers or
9-22 during particular seasons or hours of the year.
9-23 Sec. 2.306. RELIABILITY AND SAFETY. (a) Each customer
9-24 class is entitled to reliable and safe electric energy service.
9-25 (b) The commission shall:
10-1 (1) establish clear and enforceable service
10-2 reliability and safety standards;
10-3 (2) establish service quality standards that all
10-4 service providers must meet and that are comparable to or superior
10-5 to standards applicable to electric utilities on the effective date
10-6 of this section;
10-7 (3) ensure that improvements are made in any area in
10-8 which service is not adequately reliable; and
10-9 (4) ensure that downsizing and layoffs do not occur at
10-10 the expense of the safety and reliability of the electric energy
10-11 system.
10-12 Sec. 2.307. ENVIRONMENT. (a) The commission shall ensure
10-13 that changing market conditions or governmental actions that result
10-14 in new choices of energy services and supplies:
10-15 (1) are used as an opportunity to improve
10-16 environmental quality and advance renewable energy technologies,
10-17 particularly those based on native Texas resources;
10-18 (2) do not create an advantage for older, more
10-19 environmentally damaging generation facilities; and
10-20 (3) do not jeopardize cost-effective energy
10-21 conservation programs.
10-22 (b) In determining whether to approve a new generating
10-23 facility or transmission line, the commission shall:
10-24 (1) hold hearings, including public hearings;
10-25 (2) apply the approval standards in effect on the
11-1 effective date of this section, including consideration of
11-2 community values, recreational and park areas, historical and
11-3 aesthetic values, environmental integrity, future operating costs,
11-4 the financial viability of the project, and the probable
11-5 improvement of service or lowering of cost to consumers in the
11-6 area; and
11-7 (3) ensure that siting standards do not exacerbate
11-8 discriminatory treatment of low-income and minority communities.
11-9 (c) Each property owner, business owner, and resident who
11-10 may be affected by a project shall be notified in writing of the
11-11 project. A hearing must be held in which public comment is taken.
11-12 The commission must fully address the issues raised at the public
11-13 hearing before making a decision in relation to the project.
11-14 (d) A utility intending to refurbish an existing generating
11-15 facility shall submit a plan to the commission showing that the
11-16 refurbishment will meet the Environmental Protection Agency's new
11-17 source standards for power plants and result in a cost lower than
11-18 retirement of the plant and replacement of the capacity through
11-19 either building a new generating facility or purchasing power on
11-20 the wholesale market.
11-21 Sec. 2.308. RESTRUCTURING INITIATED BY UTILITIES OR THE
11-22 FEDERAL GOVERNMENT. (a) The commission may not adopt an order or
11-23 substantive rule that has the effect of:
11-24 (1) adopting an accounting procedure or depreciation
11-25 system which, directly or indirectly, reallocates the cost of
12-1 generation or other potential excess costs over market to the
12-2 transmission and distribution system;
12-3 (2) accelerating the depreciation or amortization of
12-4 generation assets or other potential excess costs over market
12-5 instead of giving rate decreases to each customer class;
12-6 (3) delaying or denying customer rate decreases or the
12-7 effects of reductions in utility costs that would have occurred
12-8 under cost of service ratemaking or would have been passed through
12-9 a fuel or purchase power cost recovery factor.
12-10 (b) If the retail electric market in this state is fully or
12-11 partially deregulated by federal law, the commission, to the extent
12-12 permitted by federal law:
12-13 (1) shall ensure that the timing of the transition to
12-14 competition is expeditious and that the transition does not result
12-15 in the denial of equal and contemporaneous choice to a customer
12-16 class;
12-17 (2) shall maintain structural safeguards to regulate
12-18 affiliate transactions as necessary to ensure that consumers are
12-19 protected from self-dealing and favoritism and to prevent
12-20 anti-competitive practices in the absence of full divestiture;
12-21 (3) may not relax regulation of an incumbent utility
12-22 without a finding, after an evidentiary hearing, that the utility
12-23 is not dominant in a geographic or service market; and
12-24 (4) may make and enforce rules required by this
12-25 subtitle that apply to all providers of electricity sold at retail.
13-1 Sec. 2.309. RESOURCE MIX. (a) The commission shall ensure
13-2 that electric utilities use a balanced mix of resources, including
13-3 renewable resources and energy efficiency.
13-4 (b) The commission shall require utilities, through
13-5 long-term planning, to diversify fuel mix to mitigate future fuel
13-6 price, fuel supply, and environmental risks.
13-7 (c) The commission shall adopt resource portfolio standards
13-8 or similar mechanisms that:
13-9 (1) apply to all distribution utilities; and
13-10 (2) establish minimum requirements for a diversified
13-11 resource mix that includes cost-effective energy efficiency,
13-12 renewable energy resources, alternative fuel, and other options
13-13 that reduce customer bills, utility fuel costs, and capital
13-14 investments.
13-15 Sec. 2.310. EXCESS COSTS OVER MARKET. (a) The Legislature
13-16 finds that the most reasonable transition to retail competition is
13-17 to bring regulated rates closer to competitive rates. The
13-18 commission shall estimate excess costs over market in order to
13-19 develop strategies to reduce regulated rates to the level that
13-20 would occur under a competitive market.
13-21 (b) The commission shall require each electric utility to
13-22 take measures to reduce the potential amount of the utility's
13-23 excess costs over market. The measures may include:
13-24 (1) renegotiation and restructuring of those existing
13-25 purchase power contracts and fuel supply contracts which are over
14-1 market price;
14-2 (2) implementation of cost controls and cost reduction
14-3 procedures directly related to generation facilities included in
14-4 the utility's excess cost over market calculation;
14-5 (3) application of consolidated tax savings;
14-6 (4) selling uneconomic assets;
14-7 (5) selling excess capacity;
14-8 (6) offsetting potential excess costs over market
14-9 through the recognition of increases in revenues due to
14-10 participation in new markets;
14-11 (7) retiring generating facilities when operating
14-12 costs and taxes exceed the cost of replacement power; and
14-13 (8) improving operating performance of assets which
14-14 are potentially over market cost.
14-15 (c) The commission may require performance standards
14-16 governing the recovery of avoidable costs associated with assets
14-17 which are potentially over market costs.
14-18 (d) The commission shall develop a procedure for estimating
14-19 a utility's excess costs over market. The computation shall
14-20 exclude administrative costs which are not directly attributable to
14-21 the generation system and must produce a net value which is based
14-22 upon the investment costs of all generating plants. A utility's
14-23 excess costs over market shall be allocated based on the annual use
14-24 of system generation by the customer or customer class and
14-25 collected on a cents per kilowatt hour basis. Three years after
15-1 the initiation of retail competition the commission shall conduct a
15-2 reconciliation of excess costs over market recovered from customers
15-3 and the excess costs over market actually incurred.
15-4 (e) If the net book value of a utility's generating system
15-5 is less than the estimated market value of the generating system,
15-6 prior to any deregulation of that utility, the commission shall
15-7 determine whether it is fair and equitable to order the utility to
15-8 compensate its ratepayers for the foregone expected cost saving.
15-9 (f) The customers and shareholders of an electric utility
15-10 subject to this subtitle shall share equitably the utility's
15-11 uneconomic investments, as determined by the commission.
15-12 (g) For purposes of this section excess costs over market
15-13 shall be defined as the difference between:
15-14 (1) the value of all of the utility's
15-15 generation-related assets that have a net book value equal to or
15-16 above their market value; and
15-17 (2) the value of all of the utility's
15-18 generation-related assets that have a net book value below their
15-19 market value, after mitigation efforts described in Subsection (b)
15-20 of this section, and excluding costs which are avoidable in the
15-21 future.
15-22 SECTION 2. This Act takes effect September 1, 1997.
15-23 SECTION 3. The importance of this legislation and the
15-24 crowded condition of the calendars in both houses create an
15-25 emergency and an imperative public necessity that the
16-1 constitutional rule requiring bills to be read on three several
16-2 days in each house be suspended, and this rule is hereby suspended.