SRC-EPT H.B. 2107 77(R)   BILL ANALYSIS


Senate Research Center   H.B. 2107
By: Turner, Sylvester (Sibley)
Business & Commerce
5/10/2001
Engrossed


DIGEST AND PURPOSE 

As part of the electric deregulation legislation passed by the 76th
Legislature, electric utilities are allowed to factor in stranded costs and
allocate them to all customers before competition begins January 1, 2002.
Stranded costs are investments or assets owned by a regulated utility, such
as a nuclear power plant, that are likely to become inefficient in a
competitive market. However, the unprecedented increase in the price of
natural gas has caused an unintended windfall for electric utilities.
Moreover, nuclear power plants are producing energy at rates comparable to
natural gas, which may eliminate a utility's need to recoup stranded costs
and may actually cause a utility to recover excess or negative stranded
costs. The Public Utility Commission (PUC) is not scheduled to review each
utility's stranded cost estimates and make adjustments to the charge
assessed to customers until true-up in January 2004. H.B. 2107 would
authorize the PUC to require utilities to stop mitigation and return
negative stranded costs to customers by reducing the affiliated retail
electric provider's price to beat.  

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a
state officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 39.052(c), Utilities Code, to provide that a
credit ordered in accordance with Section 39.201(d) is not a reduction to
retail base rates. 

SECTION 2. Amends Section 39.201(d), Utilities Code, to require the Public
Utility Commission of Texas (commission), if the commission determines that
an electric utility that is subject to Section 39.254 and that has a
service area exclusively located within the Electric Reliability Council of
Texas does not have positive stranded costs based on a computation under
Subsection (h), to order that mitigation attributable to positive
differences identified under Section 39.257, excluding estimates of
positive differences for calendar year 2001 and including mitigation
attributable to excess earnings identified in accordance with transition
plans approved by the commission, be applied such that 50 percent of such
amounts allocable to residential customers, according to a methodology
determined by the commission, be applied as a nonbypassable credit to the
electric utility's residential customers in September 2001 as ordered by
the commission. 

SECTION 3. Amends Section 39.204, Utilities Code, to require any positive
difference under the report required by Section 39.257(b) to be applied to
the net book value of generation assets, except that if Section 39.201(d)
applies, the positive differences are to be applied as ordered by the
commission. 

SECTION 4. Effective date: September 1, 2001.