By:  Bivins                                           S.B. No. 1152
                                A BILL TO BE ENTITLED
                                       AN ACT
 1-1     relating to the authority of the state to obtain electricity and to
 1-2     sell or convey that electricity.
 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-4           SECTION 1.  Subdivision (1), Section 31.002, Utilities Code,
 1-5     is amended to read as follows:
 1-6                 (1)  "Electric utility" means a person or river
 1-7     authority that owns or operates for compensation in this state
 1-8     equipment or facilities to produce, generate, transmit, distribute,
 1-9     sell, or furnish electricity in this state.  The term includes a
1-10     lessee, trustee, or receiver of an electric utility and a
1-11     recreational vehicle park owner who does not comply with Subchapter
1-12     C, Chapter 184, with regard to the metered sale of electricity at
1-13     the recreational vehicle park.  The term does not include:
1-14                       (A)  a municipal corporation;
1-15                       (B)  a qualifying facility;
1-16                       (C)  an exempt wholesale generator;
1-17                       (D)  a power marketer;
1-18                       (E)  a corporation described by Section 32.053 to
1-19     the extent the corporation sells electricity exclusively at
1-20     wholesale and not to the ultimate consumer; [or]
1-21                       (F)  this state or an agency of this state; or
1-22                       (G)  a person not otherwise an electric utility
1-23     who:
1-24                             (i)  furnishes an electric service or
 2-1     commodity only to itself, its employees, or its tenants as an
 2-2     incident of employment or tenancy, if that service or commodity is
 2-3     not resold to or used by others;
 2-4                             (ii)  owns or operates in this state
 2-5     equipment or facilities to produce, generate, transmit, distribute,
 2-6     sell, or furnish electric energy to an electric utility, if the
 2-7     equipment or facilities are used primarily to produce and generate
 2-8     electric energy for consumption by that person; or
 2-9                             (iii)  owns or operates in this state a
2-10     recreational vehicle park that provides metered electric service in
2-11     accordance with Subchapter C, Chapter 184.
2-12           SECTION 2.  Chapter 35, Utilities Code, is amended by adding
2-13     Subchapter D to read as follows:
2-14           SUBCHAPTER D.  STATE AUTHORITY TO SELL OR CONVEY POWER
2-15           Sec. 35.101.  DEFINITIONS.  In this chapter:
2-16                 (1)  "Commissioner" means the commissioner of the
2-17     General Land Office.
2-18                 (2)  "Public retail customer" means an end-use customer
2-19     that is an agency of this state, an institution of higher
2-20     education, a public school district, or a political subdivision of
2-21     this state and that purchases and ultimately consumes electricity.
2-22           Sec. 35.102.  STATE AUTHORITY TO SELL OR CONVEY POWER.  The
2-23     commissioner, acting on behalf of the state, may sell or otherwise
2-24     convey power generated from royalties taken in kind as provided by
2-25     Sections 52.133(f), 53.026, and 53.077, Natural Resources Code,
2-26     directly to a public retail customer regardless of whether the
 3-1     public retail customer is also a wholesale customer.
 3-2           Sec. 35.103.  ACCESS TO TRANSMISSION AND DISTRIBUTION
 3-3     SYSTEMS;  RATES.  (a)  Except as provided in Section 35.104, the
 3-4     state is entitled to have access to all transmission and
 3-5     distribution systems of all electric utilities, municipally owned
 3-6     utilities, and electric cooperative corporations that serve public
 3-7     retail customers.
 3-8           (b)  An entity described by Subsection (a) shall provide any
 3-9     utility service, including transmission, distribution, and other
3-10     services, to the state at the lowest applicable rate charged for
3-11     similar service to other customers.
3-12           Sec. 35.104.  RETAIL TRANSACTION LIMIT.  Sections 35.102 and
3-13     35.103 do not apply to the rates, retail service area, facilities,
3-14     or public retail customers of a municipally owned electric utility
3-15     or an electric cooperative that has not adopted retail competition.
3-16     In a certificated service area of an electric utility that is not
3-17     an electric cooperative, the state may not engage in retail
3-18     transactions that exceed 2.5 percent of a retail electric utility's
3-19     total retail load.
3-20           Sec. 35.105.  COSTS OF SERVING STATE AGENCY.  An entity
3-21     described by Section 35.103(a) shall provide any utility service,
3-22     including transmission, distribution, and other services, which
3-23     must include any stranded costs associated with providing service,
3-24     to the state at the lowest applicable rate charged for similar
3-25     service to other customers.
3-26           Sec. 35.106.  WHOLESALE CUSTOMERS.  This subchapter does not
 4-1     prevent the commissioner, acting on behalf of this state, from
 4-2     registering as a power marketer.
 4-3           Sec. 35.107.  ACCESS TO POWER GENERATION.  If pipeline
 4-4     capacity is available on an existing facility of a gas utility or
 4-5     municipally owned utility, a gas utility or a municipally owned
 4-6     utility may not refuse to provide gas service to an electric
 4-7     utility generating facility, if the purpose of the service is to
 4-8     generate power for public retail customers by the state or an
 4-9     agency of this state.
4-10           SECTION 3.  Section 52.133, Natural Resources Code, is
4-11     amended by amending Subsections (a), (c), and (d) and adding
4-12     Subsection (f) to read as follows:
4-13           (a)  Each oil or gas lease covering land leased by the board,
4-14     by a board for lease [other than the Board for Lease of University
4-15     Lands], or by the surface owner of land under which the state owns
4-16     the minerals, commonly referred to as Relinquishment Act land,
4-17     which shall be subject to approval by the commissioner before it is
4-18     effective, shall include a provision granting the board authorized
4-19     to lease the land or the owner of the soil of Relinquishment Act
4-20     land and the commissioner authority to take their royalty in kind,
4-21     and the commissioner and the boards for lease may include any other
4-22     reasonable provisions that are not inconsistent with this section.
4-23           (c)  The commissioner, the owner of the soil under Subchapter
4-24     F [of this chapter], or the commissioner, acting on the behalf of
4-25     and at the direction of an owner of the soil under Subchapter F [of
4-26     this chapter], the board, or a board for lease, or at the direction
 5-1     of the Board for Lease of University Lands, may negotiate and
 5-2     execute contracts or any other instruments or agreements necessary
 5-3     to dispose of their portion of the royalty taken in kind, including
 5-4     contracts for sale, marketing, transportation, including purchase
 5-5     and exchange agreements necessary to transport gas, and storage and
 5-6     including insurance contracts or other agreements, to secure or
 5-7     guarantee payment.
 5-8           (d)  The commissioner, the owner of the soil under Subchapter
 5-9     F, or the commissioner acting on behalf of and at the direction of
5-10     an owner of the soil under Subchapter F, the board, or a board for
5-11     lease may negotiate and execute contracts or any other instruments
5-12     or agreements necessary to convert that portion of the royalty
5-13     taken in kind into other forms of energy, including electricity.
5-14           (f)  For the purposes of this section, royalty taken in kind
5-15     includes oil or gas sold or marketed by the commissioner that has
5-16     been produced on state mineral lands or from the first three miles
5-17     of federal waters adjacent to the state boundaries, also known as
5-18     the 8g zone.  [This section does not apply to or have any effect on
5-19     the Board for Lease of University Lands or any lease executed on
5-20     university land.]
5-21           SECTION 4.  Section 53.026, Natural Resources Code, is
5-22     amended to read as follows:
5-23           Sec. 53.026.  IN KIND ROYALTY.  (a)  The commissioner or the
5-24     commissioner acting on behalf of and at the direction of the board
5-25     or a board for lease may negotiate and execute a contract or any
5-26     other instrument or agreement necessary to dispose of or enhance
 6-1     their portion of the royalty taken in kind, including contracts [a
 6-2     contract] for sale, transportation, or storage.
 6-3           (b)  The commissioner or the commissioner acting on behalf of
 6-4     and at the direction of the board or a board for lease may
 6-5     negotiate and execute a contract or any other instrument or
 6-6     agreement necessary to convert that portion of the royalty taken in
 6-7     kind to other forms of energy, including electricity.
 6-8           (c)  This section shall not be construed to surrender or in
 6-9     any way affect the right of the state under an existing or future
6-10     lease to receive monetary royalty from its lessee.
6-11           SECTION 5.  Section 53.077, Natural Resources Code, is
6-12     amended to read as follows:
6-13           Sec. 53.077.  IN KIND ROYALTY.  (a)  The commissioner, each
6-14     owner of the soil under this subchapter, or the commissioner acting
6-15     on the behalf of and at the direction of an owner of the soil under
6-16     this subchapter may negotiate and execute a contract or any other
6-17     instrument or agreement necessary to dispose of or enhance their
6-18     portion of the royalty taken in kind, including a contract for
6-19     sale, transportation, or storage.
6-20           (b)  The commissioner, each owner of the soil under this
6-21     subchapter, or the commissioner acting on behalf of and at the
6-22     direction of an owner of the soil under this subchapter may
6-23     negotiate and execute a contract or any other instrument or
6-24     agreement necessary to convert that portion of the royalty taken in
6-25     kind to other forms of energy, including electricity.
6-26           (c)  This section shall not be construed to surrender or in
 7-1     any way affect the right of the state or the owner of the soil
 7-2     under an existing or future lease to receive monetary royalty from
 7-3     its lessee.
 7-4           SECTION 6.  To the extent of any conflict between this Act
 7-5     and S.B. No. 7, Acts of the 76th Legislature, Regular Session,
 7-6     1999, S.B. No. 7 controls, regardless of the date of enactment.
 7-7           SECTION 7.  This Act takes effect September 1, 1999.
 7-8           SECTION 8.  The importance of this legislation and the
 7-9     crowded condition of the calendars in both houses create an
7-10     emergency and an imperative public necessity that the
7-11     constitutional rule requiring bills to be read on three several
7-12     days in each house be suspended, and this rule is hereby suspended.