By Merritt H.B. No. 3718
Line and page numbers may not match official copy.
Bill not drafted by TLC or Senate E&E.
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to creating a code of conduct for companies providing
1-3 retail electric, gas, and other end-use fuels; providing
1-4 enforcement and administrative penalties.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Title I, Utilities Code, is amended by adding
1-7 Chapter 2, to read as follows:
1-8 CHAPTER 2. STANDARDS OF CONDUCT
1-9 Sec. 2.001. Definitions.
1-10 (1) "Affiliate" means:
1-11 (A) a person who directly or indirectly owns or
1-12 holds at least five percent of the voting securities of a utility
1-13 company;
1-14 (B) a person in a chain of successive ownership
1-15 of at least five percent of the voting securities of a utility
1-16 company;
1-17 (C) a corporation that has at least five percent
1-18 of its voting securities owned or controlled, directly or
1-19 indirectly, by a utility company;
1-20 (D) a corporation that has at least five percent
1-21 of its voting securities owned or controlled, directly or
2-1 indirectly, by:
2-2 (i) a person who directly or indirectly
2-3 owns or controls at least five percent of the voting securities of
2-4 a utility company; or
2-5 (ii) a person in a chain of successive
2-6 ownership of at least five percent of the voting securities of a
2-7 utility company;
2-8 (E) a person who is an officer or director of a
2-9 utility company or of a corporation in a chain of successive
2-10 ownership of at least five percent of the voting securities of a
2-11 utility company; or
2-12 (F) a person determined to be an affiliate under
2-13 Section 11.006, or Section 101.004.
2-14 (2) "Competitive affiliate" means any affiliate that
2-15 is engaged in the production, sale or marketing of natural gas,
2-16 electricity, or energy-related goods or services on a competitive
2-17 basis.
2-18 (3) "Commission" means the Public Utility Commission
2-19 of Texas if used in the context of electricity or the provision of
2-20 related energy services, and the Railroad Commission of Texas if
2-21 used in the context of the provision of natural gas, transportation
2-22 or gathering of natural gas, and related energy services.
2-23 (4) "Retail electric provider" means a person that
2-24 sells electric energy to retail customers in this state.
2-25 (5) "Utility company" for purposes of this chapter
3-1 means a gas utility as defined in Section 101.003(7) and Section
3-2 121.001(a) or a natural gas gatherer under the jurisdiction of the
3-3 Railroad Commission of Texas, or an electric utility as defined in
3-4 Section 31.002(1) that provides transmission or distribution
3-5 services; for this section, "utility company" shall include
3-6 electric cooperatives, municipally-owned utilities, retail electric
3-7 providers, and wholesale electric generators.
3-8 (6) "Wholesale electric generator" means a person who
3-9 is engaged in the business of owning or operating a facility for
3-10 generating electric energy and selling electric energy at
3-11 wholesale.
3-12 Sec. 2.002. PURPOSE. The purpose of this chapter is to
3-13 establish broad safeguards to govern the interaction between
3-14 regulated energy providers and their affiliates transacting
3-15 business in competitive markets in Texas, to assure fair
3-16 competition for all participants in the marketplace, prevent
3-17 cross-subsidization of competitive activities by monopoly
3-18 customers, and prevent anti-competitive behavior between affiliated
3-19 entities.
3-20 Sec. 2.003. APPLICATION. This chapter applies to all
3-21 utility companies operating in this state and all affiliates of
3-22 such utility companies.
3-23 Sec. 2.004. GENERAL STANDARDS OF CONDUCT. (a) A utility
3-24 company shall make any products and services which it provides to
3-25 an affiliate available to its affiliates' competitors, and shall
4-1 apply its tariffs, prices, terms, conditions, and discounts in the
4-2 same manner to all similarly situated entities.
4-3 (b) A utility company shall not give its competitive
4-4 affiliate or its affiliates' customers any preferential advantage,
4-5 access or treatment, nor shall it act in any way that is
4-6 discriminatory, anti-competitive, unreasonable or unfair to an
4-7 unaffiliated competitor of an affiliate.
4-8 (c) A utility company or affiliate that is providing
4-9 electric transmission or distribution service or gas
4-10 transportation, distribution, or gathering services shall provide
4-11 such service on non-discriminatory terms and conditions and shall
4-12 not establish as a condition for the provision of such services the
4-13 purchase of other goods or services from the utility company or its
4-14 affiliate.
4-15 (d) A utility company shall not release any proprietary
4-16 customer information to an affiliate or any other entity without
4-17 the prior written authorization of the customer.
4-18 (e) A utility company shall not communicate with its current
4-19 or potential customers in a way that gives the appearance of
4-20 favoring its competitive affiliate.
4-21 (f) A utility company may not conduct joint advertising or
4-22 promotion with its affiliate.
4-23 (g) A utility company shall be a separate, independent
4-24 corporate entity from any competitive affiliates, and shall not
4-25 share its employees, facilities, information or other resources
5-1 with its competitive affiliates unless it can prove to the
5-2 commission that such sharing will not compromise the public
5-3 interest. The utility company shall fully and transparently
5-4 allocate costs for any shared services or general and
5-5 administrative support services provided to an affiliate.
5-6 (h) A utility company and its competitive affiliate shall
5-7 keep separate books of accounts and records, which shall be subject
5-8 to review by the commission.
5-9 (i) Assets or services transferred between a utility company
5-10 and a competitive affiliate shall be priced at a level which is
5-11 fair and reasonable to the customers of the utility company and
5-12 reflects the market value of the asset or service or the utility
5-13 company's fully allocated cost to provide that asset or service.
5-14 Services that are provided by a utility company on a routine or
5-15 recurring basis shall be set out in a tariff that is subject to the
5-16 approval of the commission.
5-17 Sec. 2.005. TRACKING TRANSACTIONS BETWEEN AFFILIATES. The
5-18 utility company shall submit to the commission a summary of all
5-19 transactions it conducts with each individual affiliate. This
5-20 report shall be filed by April 1 of each calendar year for the
5-21 preceding calendar year.
5-22 Sec. 2.006. DISPUTE PROVISIONS. The commission shall
5-23 investigate and resolve any complaints or disputes regarding the
5-24 conduct of a utility company and its competitive affiliates with
5-25 respect to these standards of conduct.
6-1 Sec. 2.007. ENFORCEMENT AND PENALTY PROVISION. (a) Any
6-2 utility company or competitive affiliate that violates any
6-3 provision of this section shall be subject to an administrative
6-4 penalty not to exceed $25,000 for each violation for each day that
6-5 the violation persists, with a maximum penalty of $5,000,000 for a
6-6 related series of violations. The penalty shall be determined by
6-7 the commission after a public hearing, and shall reflect the size
6-8 of the company, the gravity of the violation, the magnitude of the
6-9 harm, and any other criteria deemed appropriate by the commission.
6-10 (b) Nothing in this Act shall be construed to confer
6-11 immunity from state and federal anti-trust laws.
6-12 SECTION 2. The commission shall adopt rules implementing
6-13 this Act no later than 150 days after the effective date of this
6-14 act.
6-15 SECTION 3. This act takes effect September 1, 1999.
6-16 SECTION 4. The importance of this legislation and the
6-17 crowded condition of the calendars in both houses create an
6-18 emergency and an imperative public necessity that the
6-19 constitutional rule requiring bills to be read on three days in
6-20 each house be suspended, and this rule is hereby suspended.