By Turner of Harris, Longoria, Bailey                 H.B. No. 2107
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the recovery of stranded costs and the crediting of
 1-3     negative stranded costs.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Section 39.052(c), Utilities Code, is amended to
 1-6     read as follows:
 1-7           (c)  Notwithstanding any other provision of this title,
 1-8     during the freeze period the regulatory authority may not reduce
 1-9     the retail base rates of an electric utility, except as may be
1-10     ordered as stipulated to by an electric utility in a proceeding for
1-11     which a final order had not been issued by January 1, 1999.  A
1-12     credit ordered in accordance with Section 39.201(d) is not a
1-13     reduction to retail base rates.
1-14           SECTION 2.  Section 39.201(d), Utilities Code, is amended to
1-15     read as follows:
1-16           (d)  In accordance with a schedule and procedures it
1-17     establishes, the commission shall hold a hearing and approve or
1-18     modify and make effective as of January 1, 2002, the transmission
1-19     and distribution utility's proposed tariffs for transmission and
1-20     distribution services, the system benefit fund fee, and the
1-21     expected competition transition charge as determined under
1-22     Subsections (g) and (h) and as implemented under Subsections
1-23     (i)-(l), if any.  If the commission determines that an electric
1-24     utility that is subject to Section 39.254 and that has a service
 2-1     area exclusively located within the Electric Reliability Council of
 2-2     Texas does not have positive stranded  costs based on a computation
 2-3     under Subsection (h), the commission shall order that mitigation
 2-4     attributable to positive differences identified under Section
 2-5     39.257, excluding estimates of positive differences for calendar
 2-6     year 2001 and including mitigation attributable to excess earnings
 2-7     identified in accordance with transition plans approved by the
 2-8     commission, be applied such that 50 percent of such amounts
 2-9     allocable to residential customers, according to a methodology
2-10     determined by the commission, shall be applied as a nonbypassable
2-11     credit to the electric utility's residential customers in September
2-12     2001 as ordered by the commission.
2-13           SECTION 3.  Section 39.254, Utilities Code, is amended to
2-14     read as follows:
2-15           Sec. 39.254.  USE OF REVENUES FOR UTILITIES WITH STRANDED
2-16     COSTS. This subchapter provides a number of tools to an electric
2-17     utility to mitigate stranded costs.  Each electric utility that was
2-18     reported by the commission to have positive "excess costs over
2-19     market" (ECOM), denoted as the "base case" for the amount of
2-20     stranded costs before full retail competition in 2002 with respect
2-21     to its Texas jurisdiction, in the April 1998 Report to the Texas
2-22     Senate Interim Committee on Electric Utility Restructuring entitled
2-23     "Potentially Strandable Investment (ECOM) Report:  1998 Update,"
2-24     must use these tools to reduce the net book value of, otherwise
2-25     referred to as "accelerate" the cost recovery of, its stranded
2-26     costs each year.  Any positive difference under the report required
2-27     by Section 39.257(b) shall be applied to the net book value of
 3-1     generation assets, except that if Section 39.201(d) applies, the
 3-2     positive differences shall be applied as ordered by the commission.
 3-3           SECTION 4.  This Act takes effect September 1, 2001.