Amend HB 2107 by striking all below the enacting clause and
substituting the following:
SECTION 1. Section 39.052(c), Utilities Code, is amended to
read as follows:
(c) Notwithstanding any other provision of this title,
during the freeze period the regulatory authority may not reduce
the retail base rates of an electric utility, except as may be
ordered as stipulated to by an electric utility in a proceeding for
which a final order had not been issued by January 1, 1999. A
credit ordered in accordance with Section 39.201(f) is not a
reduction to retail base rates.
SECTION 2. Section 39.201(f), Utilities Code, is amended to
read as follows:
(f) The expected competition transition charge shall be that
as determined under Subsections (g) and (h) and as implemented
under Subsections (i)-(l). If at any time before June 15, 2001, the
commission determines that an electric utility that is subject to
Section 39.254 does not have positive stranded costs based on a
computation under Subsection (h), and would not have positive
stranded costs if all mitigation were reversed, the electric
utility shall discontinue using the mitigation tools that are
allowed by this chapter and reverse all mitigation, including any
positive differences identified under Section 39.257 for calendar
year 2001. Depreciation redirection in accordance with Section
39.256 shall be discontinued effective December 31, 2000. The
commission shall reflect the reversal of redirected depreciation in
the electric utility's transmission and distribution rates. The
commission shall order that mitigation attributable to positive
differences identified under Section 39.257, including estimates of
positive differences for calendar year 2001, and mitigation
attributable to excess earnings identified in accordance with
transition plans approved by the commission be applied as follows:
(1) 50 percent shall be applied as a nonbypassable
credit to the electric utility's customers in calendar year 2001 as
ordered by the commission; and
(2) 50 percent shall be applied as a credit against
transmission and distribution charges over five years beginning
January 1, 2002.
SECTION 3. Section 39.251(7), Utilities Code, is amended to
read as follows:
(7) "Stranded cost" means the positive excess of the
net book value of generation assets over the market value of the
assets, taking into account all of the electric utility's
generation assets, any above market purchased power costs, and any
deferred debit related to a utility's discontinuance of the
application of Statement of Financial Accounting Standards No. 71
("Accounting for the Effects of Certain Types of Regulation") for
generation-related assets if required by the provisions of this
chapter. For purposes of Section 39.262, book value shall be
established as of December 31, 2001, or the date a market value is
established through a market valuation method under Section
39.262(h), whichever is earlier, and shall include stranded costs
incurred under Section 39.263. For purposes of the true-up under
Section 39.262, the computation of stranded costs may yield a
negative value if the market value of the utilities' generation
assets exceeds the net book value of those assets, and under those
circumstances, the reconciliation of stranded cost shall fully
recognize the negative value.
SECTION 4. Section 39.254, Utilities Code, is amended to read
as follows:
Sec. 39.254. USE OF REVENUES FOR UTILITIES WITH STRANDED
COSTS. This subchapter provides a number of tools to an electric
utility to mitigate stranded costs. Each electric utility that was
reported by the commission to have positive "excess costs over
market" (ECOM), denoted as the "base case" for the amount of
stranded costs before full retail competition in 2002 with respect
to its Texas jurisdiction, in the April 1998 Report to the Texas
Senate Interim Committee on Electric Utility Restructuring entitled
"Potentially Strandable Investment (ECOM) Report: 1998 Update,"
must use these tools to reduce the net book value of, otherwise
referred to as "accelerate" the cost recovery of, its stranded
costs each year. Any positive difference under the report required
by Section 39.257(b) shall be applied to the net book value of
generation assets, except that if Section 39.201(f) applies, the
positive differences shall be applied as ordered by the commission.
SECTION 5. Section 39.262(c), Utilities Code, is amended to
read as follows:
(c) On or before <After> January 10, 2004, at a schedule and
under procedures to be determined by the commission, each
transmission and distribution utility, its affiliated retail
electric provider, and its affiliated power generation company
shall jointly file to finalize stranded costs under Subsections (h)
and (i) and reconcile those costs with the estimated stranded costs
used to develop the competition transition charge in the proceeding
held under Section 39.201. Any resulting difference shall be
applied to the nonbypassable delivery rates of the transmission and
distribution utility, except that at the utility's option, any or
all of the remaining stranded costs may be securitized under
Subchapter G. An electric utility is not required to file to
finalize and reconcile stranded costs under this section if the
electric utility did not request to securitize regulatory assets
under Subchapter G, agreed in a proceeding under Section 39.201 to
relinquish all claims to a determination and true-up of stranded
costs, and reversed all mitigation.
SECTION 6. Sections 39.262(h)(2) and (3), Utilities Code, are
amended to read as follows:
(2) Stock Valuation Method. If, at any time after
December 31, 1999, an electric utility or its affiliated power
generation company has transferred some or all of its generation
assets, including, at the election of the electric utility or power
generation company, any fuel and fuel transportation contracts
related to those assets, to one or more separate affiliated or
nonaffiliated corporations, not less than 51 percent of the common
stock of each corporation is spun off and sold to public investors
through a national stock exchange, and the common stock has been
traded for not less than six months <one year>, the resulting
average daily closing price of the common stock over 30 consecutive
trading days chosen by the commission <out of the last 120
consecutive trading days before the filing required under
Subsection (c)> establishes the market value of the common stock
equity in each transferee corporation. The book value of each
transferee corporation's debt and preferred stock securities shall
be added to the market value of its assets. The market value of
each transferee corporation's assets shall be reduced by the
corresponding net book value of the assets acquired by each
transferee corporation from any entity other than the affiliated
electric utility or power generation company. The resulting market
value of the assets establishes the market value of the generation
assets transferred by the electric utility or power generation
company to each separate corporation. If not all assets are
disposed of in this manner, the market value of the remaining
assets shall be established by one or more of the other methods in
this section.
(3) Partial Stock Valuation Method. If, at any time
after December 31, 1999, an electric utility or its affiliated
power generation company has transferred some or all of its
generation assets, including, at the election of the electric
utility or power generation company, any fuel and fuel
transportation contracts related to those assets, to one or more
separate affiliated or nonaffiliated corporations, at least 19
percent, but less than 51 percent, of the common stock of each
corporation is spun off and sold to public investors through a
national stock exchange, and the common stock has been traded for
not less than six months <one year>, the resulting average daily
closing price of the common stock over 30 consecutive trading days
chosen by the commission <out of the last 120 consecutive trading
days before the filing required under Subsection (c)> shall be
presumed to establish the market value of the common stock equity
in each transferee corporation. The commission may accept the
market valuation to conclusively establish the value of the common
stock equity in each transferee corporation or convene a valuation
panel of three independent financial experts to determine whether
the percentage of common stock sold is fairly representative of the
total common stock equity or whether a control premium exists for
the retained interest. The valuation panel must consist of
financial experts, chosen from proposals submitted in response to
commission requests, from the top 10 nationally recognized
investment banks with demonstrated experience in the United States
electric industry as indicated by the dollar amount of public
offerings of long-term debt and equity of United States
investor-owned electric companies over the immediately preceding
three years as ranked by the publications "Securities Data" or
"Institutional Investor." If the panel determines that a control
premium exists for the retained interest, the panel shall determine
the amount of the control premium, and the commission shall adopt
the determination but may not increase the market value by a
control premium greater than 10 percent. The costs and expenses of
the panel, as approved by the commission, shall be paid by each
transferee corporation. The determination of the commission based
on the finding of the panel conclusively establishes the value of
the common stock of each transferee corporation. The book value of
each transferee corporation's debt and preferred stock securities
shall be added to the market value of its assets. The market value
of each transferee corporation's assets shall be reduced by the
corresponding net book value of the assets acquired by each
transferee corporation from any entity other than the affiliated
electric utility or power generation company. The resulting market
value of the assets establishes the market value of the generation
assets transferred by the electric utility or power generation
company to each separate corporation.
SECTION 7. This Act takes effect immediately if it receives a
vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2001.