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.