By Chisum, Laney, Counts, Walker, Swinford, et al. H.B. No. 1692
77R11474 CBH-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to customer protections applicable to certain electric
1-3 utilities.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Sections 39.401, 39.402, and 39.407, Utilities
1-6 Code, are amended to read as follows:
1-7 Sec. 39.401. APPLICABILITY. This subchapter shall apply to
1-8 investor-owned electric utilities operating solely outside of ERCOT
1-9 having fewer than six synchronous interconnections with voltage
1-10 levels above 69 kilovolts systemwide on the effective date of this
1-11 subchapter. The legislature finds [This subchapter recognizes]
1-12 that circumstances exist that require that areas served by such
1-13 utilities be treated as competitive development areas in which it
1-14 is not in the public interest to transition to full retail customer
1-15 choice at this time [may develop on a more structured schedule than
1-16 is anticipated for the rest of the state. If there are any
1-17 conflicts between this subchapter and any other provisions of this
1-18 chapter, the provisions of this subchapter shall control, but shall
1-19 not be deemed to limit or in any way restrict any provision of this
1-20 title that governs customer protection or quality or reliability of
1-21 service].
1-22 Sec. 39.402. REGULATION OF UTILITY AND TRANSITION TO
1-23 COMPETITION [PLAN]. (a) Until the later of January 1, 2007, or the
1-24 date on which an electric utility subject to this subchapter is
2-1 authorized by the commission to implement customer choice, the
2-2 rates of the utility shall be regulated under traditional cost of
2-3 service regulation and the utility is subject to all applicable
2-4 regulatory authority prescribed by this subtitle and Subtitle A,
2-5 including Chapters 14, 32, 33, 36, and 37. Until the date on which
2-6 an electric utility subject to this subchapter implements customer
2-7 choice, the provisions of this chapter, other than this subchapter,
2-8 Section 39.904, and the provisions relating to the duty to obtain a
2-9 permit from the Texas Natural Resource Conservation Commission for
2-10 an electric generating facility and to reduce emissions from an
2-11 electric generating facility, shall not apply to that utility. That
2-12 portion of any commission order entered before September 1, 2001,
2-13 to comply with this subchapter shall be null and void.
2-14 (b) Until the date on which an electric utility subject to
2-15 this subchapter implements customer choice, Section 33.008 does not
2-16 apply and the utility shall pay franchise fees to a municipality as
2-17 required by the utility's franchise agreement with the
2-18 municipality. After the date on which an electric utility subject
2-19 to this subchapter implements customer choice, Section 33.008
2-20 applies. However, for purposes of computing the franchise fees as
2-21 provided by Section 33.008(b), the calendar year immediately
2-22 preceding the implementation of customer choice shall be
2-23 substituted for the year 1998.
2-24 (c) On or after January 1, 2007, an electric utility [All
2-25 electric utilities] subject to this subchapter may choose to
2-26 participate in customer choice. An electric utility that chooses
2-27 to participate in customer choice shall file a transition to
3-1 competition plan with the commission [not later than December 1,
3-2 2000]. This transition to competition plan shall identify how
3-3 utilities subject to this subchapter intend to mitigate market
3-4 power and [shall] achieve full customer choice, including specific
3-5 alternatives for constructing additional transmission facilities,
3-6 auctioning rights to generation capacity, divesting generation
3-7 capacity, or any other measure [necessary for the electric utility
3-8 to meet the requirements of Section 39.152(a) and] that is
3-9 consistent with the public interest. The utility shall also
3-10 include in the transition to competition plan a provision to
3-11 establish a price to beat for residential customers and commercial
3-12 customers having a peak load of 1,000 kilowatts or less. The
3-13 commission may prescribe additional information or provisions that
3-14 must be included in the plan. The commission shall approve,
3-15 modify, or reject a plan within 180 days after the date of a filing
3-16 under this section; provided, however, that if a hearing is
3-17 requested by any party to the proceeding, the 180-day deadline will
3-18 be extended one day for each day of hearings. The transition to
3-19 competition plan may be updated or amended annually [as
3-20 circumstances change], subject to commission approval until the
3-21 applicable power region is certified as a qualifying power region
3-22 under Section 39.152.
3-23 (d) On implementation of customer choice, an electric
3-24 utility subject to this subchapter is subject to the provisions of
3-25 this subtitle and Subtitle A to the same extent as other electric
3-26 utilities, including the provisions of Chapter 37 concerning
3-27 certificates of convenience and necessity.
4-1 Sec. 39.407. CUSTOMER CHOICE AND RELEVANT MARKET AND RELATED
4-2 MATTERS. (a) If an electric utility chooses on or after January 1,
4-3 2007, to participate in customer choice, the commission may not
4-4 authorize customer choice until the applicable power region has
4-5 been certified as a qualifying power region under Section
4-6 39.152(a). The commission shall certify that the requirements of
4-7 Section 39.152(a)(3) are met for electric utilities subject to this
4-8 subchapter only upon a finding that the total capacity owned and
4-9 controlled by each such electric utility and its affiliates does
4-10 not exceed 20 percent of the total installed generation capacity
4-11 within the constrained geographic region served by each such
4-12 electric utility plus the total available transmission capacity
4-13 capable of delivering firm power and energy to that constrained
4-14 geographic region. Not later than May 1, 2002, each electric
4-15 utility subject to this subchapter shall submit to the electric
4-16 utility restructuring legislative oversight committee an analysis
4-17 of the needed transmission facilities necessary to make the
4-18 electric utility's service area transmission capability comparable
4-19 to areas within the ERCOT power region. On or after September 1,
4-20 2003, each electric utility subject to this subchapter shall file
4-21 the utility's plans to develop the utility's transmission
4-22 interconnections with the utility's power region or other adjacent
4-23 power regions. The commission shall review the plan and not later
4-24 than the 180th day after the date the plan is filed, determine the
4-25 additional transmission facilities necessary to provide access to
4-26 power and energy that is comparable to the access provided in areas
4-27 within the ERCOT power region; provided, however, that if a hearing
5-1 is requested by any party to the proceeding, the 180-day deadline
5-2 will be extended one day for each day of hearings. The commission
5-3 shall, as a part of the commission's approval of the plan, approve
5-4 a rate rider mechanism for the recovery of the incremental costs of
5-5 those facilities after the facilities are completed and in-service.
5-6 A finding of need under this subsection shall meet the requirements
5-7 of Sections 37.056(c)(1), (2), and (4)(E).
5-8 (b) In the area of a power region served by an electric
5-9 utility subject to this subchapter, the electric utility may not
5-10 choose to participate in customer choice unless [if customer choice
5-11 is introduced before the requirements of Section 39.152(a) are met,
5-12 an affiliated retail electric provider of an electric utility
5-13 subject to this subchapter may not compete for retail customers in
5-14 any area of the power region that is within this state and outside
5-15 of the affiliated transmission and distribution utility's
5-16 certificated service area unless] the affiliated power generation
5-17 company makes a commitment to maintain and does maintain rates that
5-18 are based on cost of service for any electric cooperative or
5-19 municipally owned utility that was a wholesale customer on the date
5-20 the utility chooses to participate in customer choice [January 1,
5-21 1999,] and was purchasing power at rates that were based on cost of
5-22 service. This subsection requires a power generation company to
5-23 sell power at rates that are based on cost of service,
5-24 notwithstanding the expiration of a contract for that service,
5-25 until the requirements of Section 39.152(a) are met.
5-26 (c) If the requirements of Section 39.152(a) have not been
5-27 met for an electric utility subject to this subchapter when the
6-1 electric utility chooses to participate in customer choice, then
6-2 any power generation company in the power region affiliated with an
6-3 electric utility subject to this subchapter shall maintain adequate
6-4 supply and facilities to provide electric service to persons who
6-5 were [or would have been] retail customers of the electric utility
6-6 on the date the utility chooses to participate in customer choice
6-7 [affiliated retail electric provider on December 31, 2001]. The
6-8 obligation provided by this subsection remains in effect until the
6-9 commission determines that the requirements of Section 39.152(a)
6-10 have been met for the region.
6-11 SECTION 2. Subchapter I, Chapter 39, Utilities Code, is
6-12 amended by adding Sections 39.409 and 39.410 to read as follows:
6-13 Sec. 39.409. RECOUPMENT OF TRANSITION TO COMPETITION COSTS.
6-14 An electric utility subject to this subchapter is entitled to
6-15 recover, as provided by this section, all reasonable and necessary
6-16 expenditures made or incurred before September 1, 2001, to comply
6-17 with the provisions of this chapter. Not later than December 1,
6-18 2001, each electric utility subject to this subchapter may file
6-19 with the commission an application for recovery detailing the
6-20 amounts spent or incurred. After notice and hearing, the
6-21 commission shall review the amounts and, if found to be reasonable
6-22 and necessary, approve a transition to competition retail rate
6-23 rider mechanism for the recovery of the approved transition to
6-24 competition costs. A rate rider implemented to recover approved
6-25 transition to competition costs shall expire not later than
6-26 December 31, 2006.
6-27 Sec. 39.410. CONTRACTUAL OBLIGATIONS. This subchapter may
7-1 not:
7-2 (1) interfere with or abrogate the rights or
7-3 obligations of any party, including a retail or wholesale customer,
7-4 to a contract with an investor-owned electric utility, river
7-5 authority, municipally owned utility, or electric cooperative;
7-6 (2) interfere with or abrogate the rights or
7-7 obligations of a party under a contract or agreement concerning
7-8 certificated utility service areas; or
7-9 (3) result in a change in wholesale power costs to
7-10 wholesale customers in Texas purchasing electricity under wholesale
7-11 power contracts the pricing provisions of which are based on
7-12 formulary rates, fuel adjustments, or average system costs.
7-13 SECTION 3. Sections 39.403, 39.404, 39.405, 39.406, and
7-14 39.408, Utilities Code, are repealed.
7-15 SECTION 4. This Act takes effect immediately if it receives
7-16 a vote of two-thirds of all the members elected to each house, as
7-17 provided by Section 39, Article III, Texas Constitution. If this
7-18 Act does not receive the vote necessary for immediate effect, this
7-19 Act takes effect September 1, 2001.