LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session May 11, 2001 TO: Honorable David Sibley, Chair, Senate Committee on Business & Commerce FROM: John Keel, Director, Legislative Budget Board IN RE: HB1692 by Chisum (Relating to customer protections applicable to certain electric utilities.), Committee Report 2nd House, Substituted ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB1692, Committee Report 2nd House, Substituted: negative impact * * of $(11,457,608) through the biennium ending August 31, 2003. * ************************************************************************** General Revenue-Related Funds, Five-Year Impact: **************************************************** * Fiscal Year Probable Net Positive/(Negative) * * Impact to General Revenue Related * * Funds * * 2002 $(5,672,083) * * 2003 (5,785,525) * * 2004 (5,901,236) * * 2005 (6,019,261) * * 2006 (6,139,646) * **************************************************** All Funds, Five-Year Impact: ***************************************************** * Fiscal Year Probable Revenue Gain/(Loss) from * * General Revenue Fund (System * * Benefit Fund) * * 0001 * * 2002 $(5,672,083) * * 2003 (5,785,525) * * 2004 (5,901,236) * * 2005 (6,019,261) * * 2006 (6,139,646) * ***************************************************** Fiscal Analysis The bill would remove investor-owned utilities operating outside of the Electric Reliability Council of Texas (ERCOT) from retail competition until the later of January 1, 2007 or until the utility is authorized by the Public Utility Commission (PUC) to implement customer choice. During the period such utilities are not participating in retail competition, the utility shall be regulated under traditional cost of service regulation by the PUC. The PUC may certify a utility to enter customer choice only if the PUC finds the utility has sufficient transmission facilities to provide customers access to power and capacity from non-affiliated suppliers at a level that is comparable to the access to power and energy from capcaity controlled by non-affiliated suppliers within the ERCOT region. The bill would take effect immediately upon a two-thirds vote of each house of the Legislature, or on September 1, 2001. Methodology The bill would remove non-ERCOT investor-owned utilities from competition until January 1, 2007, and therefore remove those utilities from participation and contribution to the system benefit fund. The reduction in revenue to the system benefit fund is calculated based upon the historic usage of the non-ERCOT region and the utilities that would be affected. Subsequent years' reductions are calculated using a two percent electricity usage growth factor. The system benefit fund has been estimated to realize revenues of approximately $150 million in fiscal year 2002 and $166 million in fiscal year 2003. This bill would reduce those amounts by approximately $5 million each year. Local Government Impact No fiscal implication to units of local government is anticipated. Source Agencies: 473 Public Utility Commission of Texas LBB Staff: JK, JO, KM