1-1 By: Chisum, et al. (Senate Sponsor - Bivins) H.B. No. 1692
1-2 (In the Senate - Received from the House April 27, 2001;
1-3 April 30, 2001, read first time and referred to Committee on
1-4 Business and Commerce; May 11, 2001, reported adversely, with
1-5 favorable Committee Substitute by the following vote: Yeas 5, Nays
1-6 0; May 11, 2001, sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR H.B. No. 1692 By: Sibley
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to customer protections applicable to certain electric
1-11 utilities.
1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13 SECTION 1. Sections 39.401, 39.402, and 39.407, Utilities
1-14 Code, are amended to read as follows:
1-15 Sec. 39.401. APPLICABILITY. This subchapter shall apply to
1-16 investor-owned electric utilities operating solely outside of ERCOT
1-17 having fewer than six synchronous interconnections with voltage
1-18 levels above 69 kilovolts systemwide on the effective date of this
1-19 subchapter. The legislature finds [This subchapter recognizes]
1-20 that circumstances exist that require that areas served by such
1-21 utilities be treated as competitive development areas in which it
1-22 is not in the public interest to transition to full retail customer
1-23 choice at this time [may develop on a more structured schedule than
1-24 is anticipated for the rest of the state. If there are any
1-25 conflicts between this subchapter and any other provisions of this
1-26 chapter, the provisions of this subchapter shall control, but shall
1-27 not be deemed to limit or in any way restrict any provision of this
1-28 title that governs customer protection or quality or reliability of
1-29 service].
1-30 Sec. 39.402. REGULATION OF UTILITY AND TRANSITION TO
1-31 COMPETITION [PLAN]. (a) Until the later of January 1, 2007, or the
1-32 date on which an electric utility subject to this subchapter is
1-33 authorized by the commission to implement customer choice, the
1-34 rates of the utility shall be regulated under traditional cost of
1-35 service regulation and the utility is subject to all applicable
1-36 regulatory authority prescribed by this subtitle and Subtitle A,
1-37 including Chapters 14, 32, 33, 36, and 37. Until the date on which
1-38 an electric utility subject to this subchapter implements customer
1-39 choice, the provisions of this chapter, other than this subchapter,
1-40 Section 39.904, and the provisions relating to the duty to obtain a
1-41 permit from the Texas Natural Resource Conservation Commission for
1-42 an electric generating facility and to reduce emissions from an
1-43 electric generating facility, shall not apply to that utility. That
1-44 portion of any commission order entered before September 1, 2001,
1-45 to comply with this subchapter shall be null and void.
1-46 (b) Until the date on which an electric utility subject to
1-47 this subchapter implements customer choice, Section 33.008 does not
1-48 apply and the utility shall pay franchise fees to a municipality as
1-49 required by the utility's franchise agreement with the
1-50 municipality. After the date on which an electric utility subject
1-51 to this subchapter implements customer choice, Section 33.008
1-52 applies. However, for purposes of computing the franchise fees as
1-53 provided by Section 33.008(b), the calendar year immediately
1-54 preceding the implementation of customer choice shall be
1-55 substituted for the year 1998.
1-56 (c) On or after January 1, 2007, an electric utility [All
1-57 electric utilities] subject to this subchapter may choose to
1-58 participate in customer choice. An electric utility that chooses
1-59 to participate in customer choice shall file a transition to
1-60 competition plan with the commission [not later than December 1,
1-61 2000]. This transition to competition plan shall identify how
1-62 utilities subject to this subchapter intend to mitigate market
1-63 power and [shall] achieve full customer choice, including specific
1-64 alternatives for constructing additional transmission facilities,
2-1 auctioning rights to generation capacity, divesting generation
2-2 capacity, or any other measure [necessary for the electric utility
2-3 to meet the requirements of Section 39.152(a) and] that is
2-4 consistent with the public interest. The utility shall also
2-5 include in the transition to competition plan a provision to
2-6 establish a price to beat for residential customers and commercial
2-7 customers having a peak load of 1,000 kilowatts or less. The
2-8 commission may prescribe additional information or provisions that
2-9 must be included in the plan. The commission shall approve,
2-10 modify, or reject a plan within 180 days after the date of a filing
2-11 under this section; provided, however, that if a hearing is
2-12 requested by any party to the proceeding, the 180-day deadline will
2-13 be extended one day for each day of hearings. The transition to
2-14 competition plan may be updated or amended annually [as
2-15 circumstances change], subject to commission approval until the
2-16 applicable power region is certified as a qualifying power region
2-17 under Section 39.152.
2-18 (d) On implementation of customer choice, an electric
2-19 utility subject to this subchapter is subject to the provisions of
2-20 this subtitle and Subtitle A to the same extent as other electric
2-21 utilities, including the provisions of Chapter 37 concerning
2-22 certificates of convenience and necessity.
2-23 Sec. 39.407. CUSTOMER CHOICE AND RELEVANT MARKET AND RELATED
2-24 MATTERS. (a) If an electric utility chooses on or after January 1,
2-25 2007, to participate in customer choice, the commission may not
2-26 authorize customer choice until the applicable power region has
2-27 been certified as a qualifying power region under Section
2-28 39.152(a). Except as otherwise provided by this subsection, the
2-29 [The] commission shall certify that the requirements of Section
2-30 39.152(a)(3) are met for electric utilities subject to this
2-31 subchapter only upon a finding that the total capacity owned and
2-32 controlled by each such electric utility and its affiliates does
2-33 not exceed 20 percent of the total installed generation capacity
2-34 within the constrained geographic region served by each such
2-35 electric utility plus the total available transmission capacity
2-36 capable of delivering firm power and energy to that constrained
2-37 geographic region. Not later than May 1, 2002, each electric
2-38 utility subject to this subchapter shall submit to the electric
2-39 utility restructuring legislative oversight committee an analysis
2-40 of the needed transmission facilities necessary to make the
2-41 electric utility's service area transmission capability comparable
2-42 to areas within the ERCOT power region. On or after September 1,
2-43 2003, each electric utility subject to this subchapter shall file
2-44 the utility's plans to develop the utility's transmission
2-45 interconnections with the utility's power region or other adjacent
2-46 power regions. The commission shall review the plan and not later
2-47 than the 180th day after the date the plan is filed, determine the
2-48 additional transmission facilities necessary to provide access to
2-49 power and energy that is comparable to the access provided in areas
2-50 within the ERCOT power region; provided, however, that if a hearing
2-51 is requested by any party to the proceeding, the 180-day deadline
2-52 will be extended one day for each day of hearings. The commission
2-53 shall, as a part of the commission's approval of the plan, approve
2-54 a rate rider mechanism for the recovery of the incremental costs of
2-55 those facilities after the facilities are completed and in-service.
2-56 A finding of need under this subsection shall meet the requirements
2-57 of Sections 37.056(c)(1), (2), and (4)(E). The commission may
2-58 certify that the requirements of Section 39.152(a)(3) are met for
2-59 electric utilities subject to this subchapter if the commission
2-60 finds that:
2-61 (1) each such utility has sufficient transmission
2-62 facilities to provide customers access to power and energy from
2-63 capacity controlled by suppliers not affiliated with the incumbent
2-64 utility that is comparable to the access to power and energy from
2-65 capacity controlled by suppliers not affiliated with the incumbent
2-66 utilities in areas of the ERCOT power region; and
2-67 (2) the total capacity owned and controlled by each
2-68 such electric utility and its affiliates does not exceed 20 percent
2-69 of the total installed generation capacity within the power region.
3-1 (b) In the area of a power region served by an electric
3-2 utility subject to this subchapter, the electric utility may not
3-3 choose to participate in customer choice unless [if customer choice
3-4 is introduced before the requirements of Section 39.152(a) are met,
3-5 an affiliated retail electric provider of an electric utility
3-6 subject to this subchapter may not compete for retail customers in
3-7 any area of the power region that is within this state and outside
3-8 of the affiliated transmission and distribution utility's
3-9 certificated service area unless] the affiliated power generation
3-10 company makes a commitment to maintain and does maintain rates that
3-11 are based on cost of service for any electric cooperative or
3-12 municipally owned utility that was a wholesale customer on the date
3-13 the utility chooses to participate in customer choice [January 1,
3-14 1999,] and was purchasing power at rates that were based on cost of
3-15 service. This subsection requires a power generation company to
3-16 sell power at rates that are based on cost of service,
3-17 notwithstanding the expiration of a contract for that service,
3-18 until the requirements of Section 39.152(a) are met.
3-19 (c) If the requirements of Section 39.152(a) have not been
3-20 met for an electric utility subject to this subchapter when the
3-21 electric utility chooses to participate in customer choice, then
3-22 any power generation company in the power region affiliated with an
3-23 electric utility subject to this subchapter shall maintain adequate
3-24 supply and facilities to provide electric service to persons who
3-25 were [or would have been] retail customers of the electric utility
3-26 on the date the utility chooses to participate in customer choice
3-27 [affiliated retail electric provider on December 31, 2001]. The
3-28 obligation provided by this subsection remains in effect until the
3-29 commission determines that the requirements of Section 39.152(a)
3-30 have been met for the region.
3-31 SECTION 2. Subchapter I, Chapter 39, Utilities Code, is
3-32 amended by adding Sections 39.409 and 39.410 to read as follows:
3-33 Sec. 39.409. RECOUPMENT OF TRANSITION TO COMPETITION COSTS.
3-34 An electric utility subject to this subchapter is entitled to
3-35 recover, as provided by this section, all reasonable and necessary
3-36 expenditures made or incurred before September 1, 2001, to comply
3-37 with the provisions of this chapter. Not later than December 1,
3-38 2001, each electric utility subject to this subchapter may file
3-39 with the commission an application for recovery detailing the
3-40 amounts spent or incurred. After notice and hearing, the
3-41 commission shall review the amounts and, if found to be reasonable
3-42 and necessary, approve a transition to competition retail rate
3-43 rider mechanism for the recovery of the approved transition to
3-44 competition costs. A rate rider implemented to recover approved
3-45 transition to competition costs shall expire not later than
3-46 December 31, 2006.
3-47 Sec. 39.410. CONTRACTUAL OBLIGATIONS. This subchapter may
3-48 not:
3-49 (1) interfere with or abrogate the rights or
3-50 obligations of any party, including a retail or wholesale customer,
3-51 to a contract with an investor-owned electric utility, river
3-52 authority, municipally owned utility, or electric cooperative;
3-53 (2) interfere with or abrogate the rights or
3-54 obligations of a party under a contract or agreement concerning
3-55 certificated utility service areas; or
3-56 (3) result in a change in wholesale power costs to
3-57 wholesale customers in Texas purchasing electricity under wholesale
3-58 power contracts the pricing provisions of which are based on
3-59 formulary rates, fuel adjustments, or average system costs.
3-60 SECTION 3. Sections 39.403, 39.404, 39.405, 39.406, and
3-61 39.408, Utilities Code, are repealed.
3-62 SECTION 4. This Act takes effect immediately if it receives
3-63 a vote of two-thirds of all the members elected to each house, as
3-64 provided by Section 39, Article III, Texas Constitution. If this
3-65 Act does not receive the vote necessary for immediate effect, this
3-66 Act takes effect September 1, 2001.
3-67 * * * * *