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By: King of Parker H.B. No. 1777
A BILL TO BE ENTITLED
AN ACT
relating to regulation of the electric power market and energy
efficiency.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 15.024(c), Utilities Code, as amended by
Chapters 1212 and 1579, Acts of the 76th Legislature, Regular
Session, 1999, is reenacted and amended to read as follows:
(c) A penalty may not be assessed under this section if the
person against whom the penalty may be assessed remedies the
violation before the 31st day after the date the person receives the
notice under Subsection (b). A person who claims to have remedied
an alleged violation has the burden of proving to the commission
that the alleged violation was remedied and was accidental or
inadvertent. This subsection does not apply to a violation of
Chapter 42, [17 or] 55, or 64.
SECTION 2. Chapter 17, Utilities Code, is transferred to
Subtitle B, Title 2, Utilities Code, redesignated as Chapter 42,
Utilities Code, and amended to read as follows:
CHAPTER 42 [17]. CUSTOMER PROTECTION
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 42.001 [17.001]. CUSTOMER PROTECTION POLICY. (a) The
legislature finds that new developments in [telecommunications
services and] the production and delivery of electricity, as well
as changes in market structure, marketing techniques, and
technology, make it essential that customers have safeguards
against fraudulent, unfair, misleading, deceptive, or
anticompetitive business practices and against businesses that do
not have the technical and financial resources to provide adequate
service.
(b) The purpose of this chapter is to establish retail
customer protection standards and confer on the commission
authority to adopt and enforce rules to protect retail customers
from fraudulent, unfair, misleading, deceptive, or anticompetitive
practices.
(c) Nothing in this section shall be construed to abridge
customer rights set forth in commission rules in effect at the time
of the enactment of this chapter.
(d) This chapter does not limit the constitutional,
statutory, and common law authority of the office of the attorney
general.
(e) Nothing in this chapter authorizes a customer to receive
retail electric service from a person other than a certificated
retail electric utility.
Sec. 42.002 [17.002]. DEFINITIONS. In this chapter:
(1) "Billing agent" means any entity that submits
charges to the billing entity [utility] on behalf of itself or any
provider of a product or service.
(2) "Billing entity [utility]" means any
[telecommunications provider, as defined by Section 51.002,]
retail electric provider[,] or electric utility that issues a bill
directly to a customer for any [telecommunications or] electric
product or service.
(3) ["Certificated telecommunications utility" means
a telecommunications utility that has been granted either a
certificate of convenience and necessity, a certificate of
operating authority, or a service provider certificate of operating
authority.
[(4)] "Customer" means any person in whose name
[telephone or] retail electric service is billed, including
individuals, governmental units at all levels of government,
corporate entities, and any other entity with legal capacity to be
billed for [telephone or] retail electric service.
(4) [(5)] "Electric utility" has the meaning assigned
by Section 31.002.
(5) [(6)] "Retail electric provider" means a person
that sells electric energy to retail customers in this state after
the legislature authorizes a customer to receive retail electric
service from a person other than a certificated retail electric
utility.
(6) [(7)] "Service provider" means any entity that
offers a product or service to a customer and that directly or
indirectly charges to or collects from a customer's bill an amount
for the product or service on a customer's bill received from a
billing entity [utility].
[(8) "Telecommunications utility" has the meaning
assigned by Section 51.002.]
Sec. 42.003 [17.003]. CUSTOMER AWARENESS. (a) The
commission shall promote public awareness of changes in the
electric market [and telecommunications markets], provide
customers with information necessary to make informed choices about
available options, and ensure that customers have an adequate
understanding of their rights.
(b) The commission shall compile a report on customer
service at least once each year showing the comparative customer
information from reports given to the commission it deems
necessary.
(c) The commission shall adopt and enforce rules to require
a [certificated telecommunications utility, a] retail electric
provider[,] or an electric utility to give clear, uniform, and
understandable information to customers about rates, terms,
services, customer rights, and other necessary information as
determined by the commission.
(d) Customer awareness efforts by the commission shall be
conducted in English and Spanish and any other language as
necessary.
Sec. 42.004 [17.004]. CUSTOMER PROTECTION STANDARDS. (a)
All buyers of [telecommunications and] retail electric services are
entitled to:
(1) protection from fraudulent, unfair, misleading,
deceptive, or anticompetitive practices, including protection from
being billed for services that were not authorized or provided;
(2) choice of a [telecommunications service provider,
a] retail electric provider[,] or an electric utility, where that
choice is permitted by law, and to have that choice honored;
(3) information in English and Spanish and any other
language as the commission deems necessary concerning rates, key
terms and conditions, and the basis for any claim of environmental
benefits of certain production facilities;
(4) protection from discrimination on the basis of
race, color, sex, nationality, religion, marital status, income
level, or source of income and from unreasonable discrimination on
the basis of geographic location;
(5) impartial and prompt resolution of disputes with a
[certificated telecommunications utility, a] retail electric
provider[,] or an electric utility [and disputes with a
telecommunications service provider related to unauthorized
charges and switching of service];
(6) privacy of customer consumption and credit
information;
(7) accuracy of metering and billing;
(8) bills presented in a clear, readable format and
easy-to-understand language;
(9) information in English and Spanish and any other
language as the commission deems necessary concerning low-income
assistance programs and deferred payment plans;
(10) all consumer protections and disclosures
established by the Fair Credit Reporting Act (15 U.S.C. Section
1681 et seq.) and the Truth in Lending Act (15 U.S.C. Section 1601
et seq.); and
(11) after retail competition begins as authorized by
the legislature, programs provided by retail electric providers
that offer eligible low-income customers energy efficiency
programs, an affordable rate package, and bill payment assistance
programs designed to reduce uncollectible accounts.
(b) The commission may adopt and enforce rules as necessary
or appropriate to carry out this section, including rules for
minimum service standards for a [certificated telecommunications
utility, a] retail electric provider[,] or an electric utility
relating to customer deposits and the extension of credit,
switching fees, levelized billing programs, and termination of
service and to energy efficiency programs, an affordable rate
package, and bill payment assistance programs for low-income
customers. The commission may waive language requirements for good
cause.
(c) The commission shall request the comments of the office
of the attorney general in developing the rules that may be
necessary or appropriate to carry out this section.
(d) The commission shall coordinate its enforcement efforts
regarding the prosecution of fraudulent, misleading, deceptive,
and anticompetitive business practices with the office of the
attorney general in order to ensure consistent treatment of
specific alleged violations.
(e) Nothing in this section shall be construed to abridge
customer rights set forth in commission rules or to abridge the
rights of low-income customers to receive benefits through pending
or operating programs in effect at the time of the enactment of this
chapter.
(f) The commission shall adopt rules to provide automatic
enrollment of eligible utility customers for [lifeline telephone
service and] reduced electric rates available to low-income
households. Each state agency, on the request of the commission,
shall assist in the adoption and implementation of those rules.
(g) Notwithstanding any other provision of this title, the
rules adopted under Subsection (b) shall provide full, concurrent
reimbursement for the costs of any programs provided under
Subsection (a)(11) and for reimbursement for the difference between
any affordable rate package provided under Subsection (a)(11) and
any rates otherwise applicable.
Sec. 42.005 [17.005]. PROTECTIONS FOR CUSTOMERS OF
MUNICIPALLY OWNED UTILITIES. A municipally owned utility may not
be deemed to be a "service provider" or "billing agent" for purposes
of Sections 42.156(b) [17.156(b)] and (e). The governing body of a
municipally owned utility shall adopt, implement, and enforce rules
that shall have the effect of accomplishing the objectives set out
in Sections 42.004(a) and (b) and 42.102 [17.004(a) and (b) and
17.102], as to the municipally owned utility within its
certificated service area. The governing body of a municipally
owned utility or its designee shall perform the dispute resolution
function provided for by Section 42.157 [17.157] for disputes
arising from services provided by the municipally owned utility to
electric customers served within the municipally owned utility's
certificated service area. With respect to electric customers
served by a municipally owned utility outside its certificated
service area or otherwise served through others' distribution
facilities, after retail competition begins as authorized by the
legislature, the provisions of this chapter as administered by the
commission apply. Nothing in this chapter shall be deemed to apply
to a wholesale customer of a municipally owned utility.
Sec. 42.006 [17.006]. PROTECTIONS FOR CUSTOMERS OF
ELECTRIC COOPERATIVES. An electric cooperative shall not be deemed
to be a "service provider" or "billing agent" for purposes of
Sections 42.156(b) [17.156(b)] and (e). The electric cooperative
shall adopt, implement, and enforce rules that shall have the
effect of accomplishing the objectives set out in Sections
42.004(a) and (b) and 42.102 [17.004(a) and (b) and 17.102]. The
board of directors of the electric cooperative or its designee
shall perform the dispute resolution function provided for by
Section 42.157 [17.157] for electric customers served by the
electric cooperative within its certificated service area. With
respect to electric customers served by an electric cooperative
outside its certificated service area or otherwise served through
others' distribution facilities, after the legislature authorizes
retail competition, the provisions of this chapter as administered
by the commission shall apply. Nothing in this chapter shall be
deemed to apply to a wholesale customer of an electric cooperative.
Sec. 42.007 [17.007]. ELIGIBILITY PROCESS FOR CUSTOMER
SERVICE DISCOUNTS. The commission by rule shall provide for an
[integrated] eligibility process for customer service discounts,
including discounts under Section [Sections] 39.903 [and 55.015].
SUBCHAPTER B. CERTIFICATION, REGISTRATION,
AND REPORTING REQUIREMENTS
Sec. 42.051 [17.051]. ADOPTION OF RULES. (a) The
commission shall adopt rules relating to certification,
registration, and reporting requirements for a [certificated
telecommunications utility, a] retail electric provider[,] or an
electric utility, as well as all [telecommunications utilities that
are not dominant carriers, pay telephone providers,] qualifying
facilities that are selling capacity into the wholesale or retail
market, exempt wholesale generators, and power marketers.
(b) The rules adopted under Subsections (a) and (c) shall be
consistent with and no less effective than federal law and may not
require the disclosure of highly sensitive competitive or trade
secret information.
(c) The commission shall adopt rules governing the local
registration of retail electric providers under Section 39.358.
Sec. 42.052 [17.052]. SCOPE OF RULES. The commission may
adopt and enforce rules to:
(1) require certification or registration with the
commission as a condition of doing business in this state, except
that this requirement does not apply to municipally owned
utilities;
(2) amend certificates or registrations to reflect
changed ownership and control;
(3) establish rules for customer service and
protection;
(4) suspend or revoke certificates or registrations
for repeated violations of this chapter or commission rules, except
that the commission may not revoke a certificate of convenience and
necessity of an electric utility except as provided by Section
37.059 [or a certificate of convenience and necessity of a
telecommunications utility except as provided by Section 54.008];
and
(5) order [disconnection of a pay telephone service
provider's pay telephones or] revocation of certification or
registration for repeated violations of this chapter or commission
rules.
Sec. 42.053 [17.053]. REPORTS. The commission may require
a [telecommunications service provider, a] retail electric
provider[,] or an electric utility to submit reports to the
commission concerning any matter over which it has authority under
this chapter.
SUBCHAPTER C. CUSTOMER'S RIGHT TO CHOICE
Sec. 42.101 [17.101]. POLICY. It is the policy of this
state that all customers be protected from the unauthorized
switching of a [telecommunications service provider, a] retail
electric provider[,] or an electric utility selected by the
customer to provide service, where choice is permitted by law.
Sec. 42.102 [17.102]. RULES RELATING TO CHOICE. The
commission shall adopt and enforce rules that:
(1) ensure that customers are protected from deceptive
practices employed in obtaining authorizations of service and in
the verification of change orders, including negative option
marketing, sweepstakes, and contests that cause customers to
unknowingly change their [telecommunications service provider,]
retail electric provider[,] or electric utility, where choice is
permitted by law;
(2) provide for clear, easily understandable
identification, in each bill sent to a customer, of all
[telecommunications service providers,] retail electric
providers[,] or electric utilities submitting charges on the bill;
(3) ensure that every service provider submitting
charges on the bill is clearly and easily identified on the bill
along with its services, products, and charges;
(4) provide that unauthorized changes in service be
remedied at no cost to the customer within a period established by
the commission;
(5) require refunds or credits to the customer in the
event of an unauthorized change; and
(6) provide for penalties for violations of commission
rules adopted under this section, including fines and revocation of
certificates or registrations, by this action denying the
[certificated telecommunications utility, the] retail electric
provider[,] or the electric utility the right to provide service in
this state, except that the commission may not revoke a certificate
of convenience and necessity of an electric utility except as
provided by Section 37.059 [or a certificate of convenience and
necessity of a telecommunications utility except as provided by
Section 54.008].
SUBCHAPTER D. PROTECTION AGAINST UNAUTHORIZED CHARGES
Sec. 42.151 [17.151]. REQUIREMENTS FOR SUBMITTING CHARGES.
(a) A service provider, retail electric provider, or billing agent
may submit charges for a new product or service to be billed on a
customer's [telephone or] retail electric bill on or after the
effective date of this section only if:
(1) the service provider offering the product or
service has thoroughly informed the customer of the product or
service being offered, including all associated charges, and has
explicitly informed the customer that the associated charges for
the product or service will appear on the customer's [telephone or]
electric bill;
(2) the customer has clearly and explicitly consented
to obtain the product or service offered and to have the associated
charges appear on the customer's [telephone or] electric bill and
the consent has been verified as provided by Subsection (b); and
(3) the service provider offering the product or
service and any billing agent for the service provider:
(A) has provided the customer with a toll-free
telephone number the customer may call and an address to which the
customer may write to resolve any billing dispute and to answer
questions; and
(B) has contracted with the billing entity
[utility] to bill for products and services on the billing entity's
[utility's] bill as provided by Subsection (c).
(b) The customer consent required by Subsection (a)(2) must
be verified by the service provider offering the product or service
by authorization from the customer. A record of the customer
consent, including verification, must be maintained by the service
provider offering the product or service for a period of at least 24
months immediately after the consent and verification have been
obtained. The method of obtaining customer consent and
verification must include one or more of the following:
(1) written authorization from the customer;
(2) toll-free telephonic [electronic] authorization
[placed from the telephone number that is the subject of the product
or service];
(3) oral authorization obtained by an independent
third party; or
(4) any other method of authorization approved by the
commission [or the Federal Communications Commission].
(c) The contract required by Subsection (a)(3)(B) must
include the service provider's name, business address, and business
telephone number and shall be maintained by the billing entity
[utility] for as long as the billing for the products and services
continues and for the 24 months immediately following the permanent
discontinuation of the billing.
(d) A service provider offering a product or service to be
charged on a customer's [telephone or] electric bill and any
billing agent for the service provider may not use any fraudulent,
unfair, misleading, deceptive, or anticompetitive marketing
practice to obtain customers, including the use of negative option
marketing, sweepstakes, and contests.
(e) Unless verification is required by federal law or rules
implementing federal law, Subsection (b) does not apply to
customer-initiated transactions with [a certificated
telecommunications provider or] an electric utility for which the
service provider has the appropriate documentation.
(f) If a service provider is notified by a billing entity
[utility] that a customer has reported to the billing entity
[utility] that a charge made by the service provider is
unauthorized, the service provider shall cease to charge the
customer for the unauthorized product or service.
[(g) This section does not apply to message
telecommunications services charges that are initiated by dialing
1+, 0+, 0-, 1010XXX, or collect calls and charges for video services
if the service provider has the necessary call detail record to
establish the billing for the call or service.]
Sec. 42.152 [17.152]. RESPONSIBILITIES OF BILLING ENTITY
[UTILITY]. (a) If a customer's [telephone or] retail electric bill
is charged for any product or service without proper customer
consent or verification, the billing entity [utility], on its
knowledge or notification of any unauthorized charge, shall
promptly, not later than 45 days after the date of knowledge or
notification of the charge:
(1) notify the service provider to cease charging the
customer for the unauthorized product or service;
(2) remove any unauthorized charge from the customer's
bill;
(3) refund or credit to the customer all money that has
been paid by the customer for any unauthorized charge, and if the
unauthorized charge is not adjusted within three billing cycles,
shall pay interest on the amount of the unauthorized charge;
(4) on the customer's request, provide the customer
with all billing records under its control related to any
unauthorized charge within 15 business days after the date of the
removal of the unauthorized charge from the customer's bill; and
(5) maintain for at least 24 months a record of every
customer who has experienced any unauthorized charge for a product
or service on the customer's [telephone or] electric bill and who
has notified the billing entity [utility] of the unauthorized
charge.
(b) A record required by Subsection (a)(5) shall contain for
each unauthorized charge:
(1) the name of the service provider that offered the
product or service;
(2) any affected [telephone numbers or] addresses;
(3) the date the customer requested that the billing
entity [utility] remove the unauthorized charge;
(4) the date the unauthorized charge was removed from
the customer's [telephone or] electric bill; and
(5) the date any money that the customer paid for the
unauthorized charges was refunded or credited to the customer.
(c) A billing entity [utility] may not:
(1) disconnect or terminate [telecommunications or]
electric service to any customer for nonpayment of an unauthorized
charge; or
(2) file an unfavorable credit report against a
customer who has not paid charges the customer has alleged were
unauthorized unless the dispute regarding the unauthorized charge
is ultimately resolved against the customer, except that the
customer shall remain obligated to pay any charges that are not in
dispute, and this subsection does not apply to those undisputed
charges.
Sec. 42.153 [17.153]. RECORDS OF DISPUTED CHARGES. (a)
Every service provider shall maintain a record of every disputed
charge for a product or service placed on a customer's bill.
(b) The record required under Subsection (a) shall contain
for every disputed charge:
(1) any affected [telephone numbers or] addresses;
(2) the date the customer requested that the billing
entity [utility] remove the unauthorized charge;
(3) the date the unauthorized charge was removed from
the customer's [telephone or] retail electric bill; and
(4) the date action was taken to refund or credit to
the customer any money that the customer paid for the unauthorized
charges.
(c) The record required by Subsection (a) shall be
maintained for at least 24 months following the completion of all
steps required by Section 42.152(a) [17.152(a)].
Sec. 42.154 [17.154]. NOTICE. (a) A billing entity
[utility] shall provide notice of a customer's rights under this
section in the manner prescribed by the commission.
(b) Each [Notice of a customer's rights must be provided by
mail to each residential and retail business customer within 60
days of the effective date of this section or by inclusion in the
publication of the telephone directory next following the effective
date of this section. In addition, each] billing entity [utility]
shall send [the] notice of a customer's rights to new customers at
the time service is initiated or to any customer at that customer's
request.
Sec. 42.155 [17.155]. PROVIDING COPY OF RECORDS. A billing
entity [utility] shall provide a copy of records maintained under
Sections 42.151(c), 42.152, and 42.154 [17.151(c), 17.152, and
17.154] to the commission staff on request. A service provider
shall provide a copy of records maintained under Sections 42.151(b)
and 42.153 [17.151(b) and 17.153] to the commission on request.
Sec. 42.156 [17.156]. VIOLATIONS. (a) If the commission
finds that a billing entity [utility] violated this subchapter, the
commission may implement penalties and other enforcement actions
under Chapter 15.
(b) If the commission finds that any other service provider
or billing agent subject to this subchapter has violated this
subchapter or has knowingly provided false information to the
commission on matters subject to this subchapter, the commission
may enforce the provisions of Chapter 15 against the service
provider or billing agent as if it were regulated by the commission.
(c) Neither the authority granted under this section nor any
other provision of this subchapter shall be construed to grant the
commission jurisdiction to regulate service providers or billing
agents who are not otherwise subject to commission regulation,
other than as specifically provided by this chapter.
(d) If the commission finds that a billing entity [utility]
or service provider repeatedly violates this subchapter, the
commission may, if the action is consistent with the public
interest, suspend, restrict, or revoke the registration or
certificate of the [telecommunications service provider,] retail
electric provider[,] or electric utility, by this action denying
the [telecommunications service provider,] retail electric
provider[,] or electric utility the right to provide service in
this state, except that the commission may not revoke a certificate
of convenience and necessity of an electric utility except as
provided by Section 37.059 [or a certificate of convenience and
necessity of a telecommunications utility except as provided by
Section 54.008].
(e) If the commission finds that a service provider or
billing agent has repeatedly violated any provision of this
subchapter, the commission may order the billing entity [utility]
to terminate billing and collection services for that service
provider or billing agent.
(f) Nothing in this subchapter shall be construed to
preclude a billing entity [utility] from taking action on its own to
terminate or restrict its billing and collection services.
Sec. 42.157 [17.157]. DISPUTES. (a) The commission may
resolve disputes between a retail customer and a billing entity
[utility], service provider, [telecommunications utility,] retail
electric provider, or electric utility.
(b) In exercising its authority under Subsection (a), the
commission may:
(1) order a billing entity [utility], service
provider, retail electric provider, or electric utility to produce
information or records;
(2) require that all contracts, bills, and other
communications from a billing entity [utility], service provider,
retail electric provider, or electric utility display a working
toll-free telephone number that customers may call with complaints
and inquiries;
(3) require a billing entity [utility], service
provider, retail electric provider, or electric utility to refund
or credit overcharges or unauthorized charges with interest if the
billing entity [utility], service provider, retail electric
provider, or electric utility has failed to comply with commission
rules or a contract with the customer;
(4) order appropriate relief to ensure that a
customer's choice of a [telecommunications service provider, a]
retail electric provider[,] or an electric utility that encompasses
a geographic area in which more than one provider has been
certificated is honored;
(5) require the continuation of service to a
residential or small commercial customer while a dispute is pending
regarding charges the customer has alleged were unauthorized; and
(6) investigate an alleged violation.
(c) The commission shall adopt procedures for the
resolution of disputes in a timely manner, which in no event shall
exceed 60 days.
Sec. 42.158 [17.158]. CONSISTENCY WITH FEDERAL LAW. Rules
adopted by the commission under this subchapter shall be consistent
with and not more burdensome than applicable federal laws and
rules.
Sec. 42.159. COMPLAINT REGARDING RECREATIONAL VEHICLE PARK
OWNER. (a) An affected person may complain to the regulatory
authority in writing describing an act or omission by a
recreational vehicle park owner who provides metered electric
service under Subchapter C, Chapter 184, in violation or claimed
violation of a law that the regulatory authority has jurisdiction
to administer or of an order, ordinance, or rule of the regulatory
authority.
(b) The commission shall keep for a reasonable period an
information file about each complaint filed with the commission
relating to a recreational vehicle park owner.
(c) The commission, at least quarterly and until final
disposition of the written complaint, shall notify the parties to
the complaint of the status of the complaint unless the notice would
jeopardize an undercover investigation.
SECTION 3. Section 33.023, Utilities Code, is amended by
amending Subsection (b) and adding Subsection (c) to read as
follows:
(b) The electric utility in the ratemaking proceeding shall
reimburse the governing body of the municipality for the reasonable
and necessary cost of the services of a person engaged under
Subsection (a) to the extent the applicable regulatory authority
determines the cost is reasonable and necessary.
(c) In determining whether attorney's fees to be recovered
under this section are reasonable and necessary, the applicable
regulatory authority shall consider the factors prescribed by Rule
1.04, Texas Disciplinary Rules of Professional Conduct.
SECTION 4. Section 35.004(e), Utilities Code, is amended to
read as follows:
(e) The commission shall ensure that ancillary services
necessary to facilitate the transmission of electric energy are
made available by suppliers and acquired by the independent
organization at reasonable prices with terms and conditions that
are not unreasonably preferential, prejudicial, discriminatory,
predatory, or anticompetitive. In this subsection, "ancillary
services" means services necessary to facilitate the transmission
of electric energy including load following, standby power, backup
power, reactive power, and any other services as the commission may
determine by rule. [On the introduction of customer choice in the
ERCOT power region, acquisition of generation-related ancillary
services on a nondiscriminatory basis by the independent
organization in ERCOT on behalf of entities selling electricity at
retail shall be deemed to meet the requirements of this
subsection.]
SECTION 5. Subchapter E, Chapter 36, Utilities Code, is
amended by adding Section 36.209 to read as follows:
Sec. 36.209. RECOVERY BY CERTAIN NON-ERCOT UTILITIES OF
CERTAIN TRANSMISSION COSTS. (a) This section applies only to an
electric utility that operates solely outside of ERCOT in areas of
this state included in the Southwest Power Pool and that owns or
operates transmission facilities.
(b) Notwithstanding Section 36.201, after notice and
hearing, the commission may allow an electric utility to recover on
an annual basis its reasonable and necessary expenditures for
transmission infrastructure improvement costs and changes in
wholesale transmission charges to the electric utility under a
tariff approved by a federal regulatory authority to the extent
that the costs or charges have not otherwise been recovered. The
commission may allow the electric utility to recover only the costs
allocable to retail customers in this state and may not allow the
electric utility to over-recover costs.
SECTION 6. Section 38.001, Utilities Code, is amended to
read as follows:
Sec. 38.001. GENERAL STANDARD. An electric utility, a
municipally owned utility, an independent organization certified
under Section 39.151, and an electric cooperative shall furnish
service, instrumentalities, and facilities that are safe,
adequate, efficient, and reasonable.
SECTION 7. Section 38.005, Utilities Code, is amended by
amending Subsection (a) and adding Subsections (g) and (h) to read
as follows:
(a) The commission shall adopt and enforce rules as
necessary or appropriate to ensure [implement] service quality and
reliability [standards] relating to the delivery of electricity to
retail customers by electric utilities and transmission and
distribution utilities. The commission by rule shall develop
reliability standards, including:
(1) the system-average interruption frequency index
(SAIFI);
(2) the system-average interruption duration index
(SAIDI);
(3) achievement of average response time for customer
service requests or inquiries; or
(4) other standards that the commission finds
reasonable and appropriate.
(g) This section does not authorize the commission to:
(1) establish or enforce quality standards for local
distribution service provided by a municipally owned utility or an
electric cooperative; or
(2) require reporting of local distribution service
quality by a municipally owned utility or an electric cooperative.
(h) An electric utility, transmission and distribution
utility, municipally owned utility, electric cooperative, or
independent organization certified under Section 39.151, and any
other person scheduling power or operating an electrical facility
on behalf of such persons, shall observe all reliability, security,
and emergency management rules and orders adopted or issued by the
commission. The commission may:
(1) take any enforcement action against a person who
does not comply with this subsection that is authorized by
Subchapter B, Chapter 15; or
(2) suspend, revoke, or amend an electric utility's or
transmission and distribution utility's certificate of public
convenience and necessity.
SECTION 8. Subchapter D, Chapter 38, Utilities Code, is
amended by adding Section 38.072 to read as follows:
Sec. 38.072. ELECTRIC TECHNOLOGY IMPROVEMENT. (a) The
commission shall adopt rules for the recovery of costs that
utilities incur for research and development of technologies and
business practices related to the production, transmission,
distribution, storage, metering, and use of electricity,
mitigating risks in competitive energy markets, minimizing the
environmental impacts of production and delivery of electricity,
and developing uniform commercial standards for the energy
industry.
(b) The rules shall encourage utilities to take advantage of
the research and development resources in this state and its
institutions with the objective of providing to the state and its
citizens the benefits of advanced electricity technologies,
systems, and processes, increased efficiency and reliability in the
production, delivery, and use of electricity, reduced cost of
providing electricity, and reduced environmental impact of
electricity production and delivery while contributing to economic
development and job creation.
SECTION 9. Section 39.002, Utilities Code, is amended to
read as follows:
Sec. 39.002. APPLICABILITY. This chapter, other than
Sections 39.151(j), 39.155, 39.157(a) and (e) [39.157(e)], 39.203,
39.903, and 39.904, does not apply to a municipally owned utility or
an electric cooperative. Sections 39.157(e), 39.203, and 39.904,
however, apply only to a municipally owned utility or an electric
cooperative that is offering customer choice. Section 39.157(a)
applies to a municipally owned utility or electric cooperative only
in relation to a wholesale market transaction. If there is a
conflict between the specific provisions of this chapter and any
other provisions of this title, except for Chapters 40 and 41, the
provisions of this chapter control.
SECTION 10. Section 39.151, Utilities Code, is amended by
amending Subsections (b), (c), (d), (e), (g), and (j) and adding
Subsections (g-1), (g-2), (n), (o), and (p) to read as follows:
(b) "Independent organization" means an independent system
operator or other person that is sufficiently independent of any
producer or seller of electricity that its decisions will not be
unduly influenced by any producer or seller. [An entity will be
deemed to be independent if it is governed by a board that has three
representatives from each segment of the electric market, with the
consumer segment being represented by one residential customer, one
commercial customer, and one industrial retail customer.]
(c) The commission shall certify an independent
organization or organizations to perform the functions prescribed
by this section. The commission has complete authority to oversee,
require the commission's approval of, and order modifications of
any part of the finances, budget, or administration of an
independent organization certified under this section.
(d) An independent organization certified by the commission
for a power region shall establish and enforce procedures,
consistent with this title and the commission's rules, relating to
the reliability of the regional electrical network and accounting
for the production and delivery of electricity among generators and
all other market participants. The procedures shall be subject to
commission oversight and review. An independent organization
certified by the commission is directly responsible and accountable
to the commission. The organization shall fully cooperate with the
commission in the commission's oversight and investigatory
functions. The commission may decertify an organization that does
not adequately perform the organization's functions or duties or
does not comply with this section.
(e) The commission by rule shall require an independent
organization certified under this section to provide the commission
with sufficiently detailed information to allow the commission to
review and approve or disapprove the independent organization's
budget for cost efficiencies and for the reasonableness and
necessity of budget items. The rules must include a timetable for
an independent organization to file its budget for review under the
rules. The commission's budget review must include a review of
salaries, employee benefits, and the independent organization's
use of debt financing. After determining the overall
reasonableness and necessity of an independent organization's
budget, the [The] commission, in the same proceeding, may authorize
the [an] independent organization [that is certified under this
section] to charge [a reasonable and competitively neutral rate] to
wholesale buyers and sellers a reasonable and competitively neutral
rate determined by the commission to allow [cover] the independent
organization a reasonable opportunity to take in a reasonable and
necessary amount of revenue, as determined by the commission in the
budget review process. The independent organization may change the
rate established by the commission in the budget review process
only with the commission's approval. On the commission's own
initiative or on receiving a complaint, the commission may inquire
into the reasonableness of an independent organization's budget or
rate [costs].
(g) To maintain certification as an independent
organization under this section, an organization's [If it amends
its governance rules to provide that its governing body is composed
as prescribed by this subsection, the existing independent system
operator in ERCOT will meet the criteria provided by Subsection (a)
with respect to ensuring access to the transmission systems for all
buyers and sellers of electricity in the ERCOT region and ensuring
the reliability of the regional electrical network. To comply with
this subsection, the] governing body must be composed of persons
specified by this section and selected in accordance with formal
bylaws or protocols of the organization. The process must allow for
commission input in identifying candidates. The governing body
must be composed of:
(1) the chairman of the commission as an ex officio
nonvoting member;
(2) the counsellor as an ex officio voting member
representing residential and small commercial consumer interests;
(3) the chief executive officer [director] of the
independent system operator as an ex officio voting member;
(4) six market participants elected by their
respective market segments to serve one-year terms, with:
(A) one representing independent generators;
(B) one representing investor-owned utilities;
(C) one representing power marketers;
(D) one representing retail electric providers;
(E) one representing municipally owned
utilities; and
(F) one representing electric cooperatives [four
representatives of the power generation sector as voting members];
(5) one member representing industrial consumer
interests and elected by the industrial consumer market segment to
serve a one-year term [four representatives of the transmission and
distribution sector as voting members];
(6) one member representing large commercial consumer
interests selected by the outgoing large commercial consumer
representative to serve a one-year term [four representatives of
the power sales sector as voting members]; and
(7) five members unaffiliated with any market segment
and selected by the other members of the governing body to serve
three-year terms [the following people as voting members, appointed
by the commission:
[(A) one representative of residential
customers;
[(B) one representative of commercial customers;
and
[(C) one representative of industrial
customers].
[The four representatives specified in each of Subdivisions
(4), (5), and (6) shall be selected in a manner that ensures
equitable representation for the various sectors of industry
participants.]
(g-1) The presiding officer of the governing body must be
one of the members described by Subsection (g)(7).
(g-2) The governing body and its members are subject to
Chapter 551, Government Code, in the same manner as that chapter
applies to a governmental body and the members of a governmental
body, except that the requirements pertaining to executive sessions
of the governing body, to advance notice of meetings and planned
agendas of the meetings, and the opportunity to comment on matters
under discussion at the meetings contained in the independent
organization's bylaws apply in lieu of conflicting requirements of
that chapter.
(j) A retail electric provider, municipally owned utility,
electric cooperative, power marketer, transmission and
distribution utility, or power generation company, or any other
person who participates in a market operated by the independent
system operator in ERCOT, shall observe all scheduling, operating,
planning, reliability, and settlement policies, rules, guidelines,
and procedures established by the independent system operator in
ERCOT. A violation by any person of [Failure to comply with] this
subsection may result in the revocation, suspension, or amendment
of that person's [a] certificate or registration as provided by
Section 39.356 or in the imposition against that person of an
administrative penalty [as provided by Section 39.357]. The
commission may require the refunding or disgorgement of unjust
profits that accrue as a result of a violation of this subsection.
(n) Subsections (a), (b), (f), (k), (l), and (m) apply to an
independent organization established to serve areas located
outside of the ERCOT power region. Subsections (c), (d), (e), (g),
(h), (i), and (j) do not apply to an independent organization
established to serve areas located outside of the ERCOT power
region. The commission, however, may certify an independent
organization or organizations outside of ERCOT to perform the
functions described by Subsection (a).
(o) An independent organization certified under this
section is subject to Chapter 552, Government Code, as if it were a
governmental body under that chapter.
(p) Information is excepted from the requirements of
Section 552.021, Government Code, if the information is collected,
assembled, or maintained by or for the independent organization:
(1) as part of the duty of the organization to support
wholesale and retail electric markets and the information is
competitively sensitive information of a third party that provides
electric service within the transmission system managed by the
independent organization that if disclosed, would give advantage to
competitors or prospective competitors of the third party;
(2) for the purpose of maintaining the reliability of
an electric transmission system that if disclosed, could provide
information about security measures of the independent
organization or information about the transmission system or a
related control or communication system that could aid acts of
terrorism or other criminal activity against the independent
organization or the electric transmission system; or
(3) in relation to the development or construction of
a system used by the independent organization to maintain the
security and reliability of the transmission grid or in support of
market systems or processes of the independent organization.
SECTION 11. Subchapter D, Chapter 39, Utilities Code, is
amended by adding Sections 39.1511, 39.1512, and 39.1515 to read as
follows:
Sec. 39.1511. PUBLIC MEETINGS OF GOVERNING BODY OF
INDEPENDENT ORGANIZATION. (a) The bylaws of the independent
organization and the rules of the commission shall provide for the
governing body or subcommittee to enter into executive session
closed to the public to address sensitive matters such as
confidential personnel information, contracts, lawsuits,
competitively sensitive information, customer proprietary
information, or other information that by law is privileged or
confidential or that is related to security of the regional
electrical network.
(b) The bylaws of the independent organization and rules of
the commission must ensure that a person interested in the
activities of the independent organization has an opportunity to
obtain at least seven days' advance notice of meetings of the
governing body and the planned agendas of the meetings and an
opportunity to comment on matters under discussion at the meetings.
(c) In an emergency or if there is an urgent public
necessity, the notice of a meeting or the supplemental notice of a
subject added as an item to the agenda for a meeting for which
notice has been posted in accordance with Subsection (b) is
sufficient if the notice is posted for at least two hours before the
meeting is convened and if the notice or supplemental notice
clearly identifies the emergency or urgent public necessity. An
emergency or an urgent public necessity is considered to exist only
if immediate action is required of the governing body because of an
imminent threat to public health and safety or a reasonably
unforeseeable situation.
(d) This section does not apply to an independent
organization established to serve areas located outside of ERCOT.
Sec. 39.1512. DISCLOSURE OF INTEREST IN MATTER BEFORE
INDEPENDENT ORGANIZATION'S GOVERNING BODY; PARTICIPATION IN
DECISION. (a) If a matter comes before the governing body of an
independent organization certified under Section 39.151 and a
member or a person that member represents has a direct interest in
that matter, the member shall publicly disclose the fact of that
interest to the governing body at a public meeting of the body. The
member shall recuse himself or herself from the governing body's
deliberations and actions on the matter and may not vote on the
matter or otherwise participate in a governing body decision on the
matter.
(b) A disclosure made under Subsection (a) shall be entered
in the minutes of the meeting at which the disclosure is made.
(c) The fact that a member is recused from a vote or decision
by application of this section does not affect the existence of a
quorum.
(d) This section does not apply to an independent
organization established to serve areas located outside ERCOT.
Sec. 39.1515. WHOLESALE ELECTRIC MARKET MONITOR. (a) An
independent organization certified under Section 39.151 shall
contract with a private person selected by the commission to act as
the wholesale electric market monitor and to detect and prevent
market power abuses, potential market power abuses, and other
violations of this subchapter.
(b) The independent organization shall provide to the
personnel of the market monitor:
(1) full access to the organization's main operations
center; and
(2) other support and cooperation necessary for the
market monitor to perform the market monitor's functions.
(c) The independent organization shall use money from the
rate authorized by Section 39.151(e) to pay for the market
monitor's activities.
(d) The commission is responsible for ensuring that the
market monitor has the resources, expertise, and access to
information necessary to monitor effectively the wholesale
electric market and shall adopt rules and perform oversight of the
market monitor as necessary. The market monitor shall operate
under the supervision and oversight of the commission. The
commission shall retain all enforcement authority conferred under
this title and this section may not be construed to confer
enforcement authority on the market monitor or to authorize the
commission to delegate the commission's enforcement authority to
the market monitor. The commission by rule shall define:
(1) the market monitor's monitoring responsibilities;
(2) the standards for funding the market monitor,
including staffing requirements;
(3) qualifications for personnel of the market
monitor;
(4) ethical standards for the market monitor and the
personnel of the market monitor;
(5) procedures and standards for communications
between the market monitor and both the commission and the
independent organization;
(6) the nature and timing of reports the commission
determines the market monitor shall provide to the commission,
market participants, and the independent organization; and
(7) procedures for the market monitor to observe in
complying with Subsection (i).
(e) In adopting rules governing the standards for funding
the market monitor, the commission shall consult with a
subcommittee of the independent organization's governing body to
receive information on how money is or should be spent for
monitoring functions. Rules governing ethical standards must
include provisions designed to ensure that the personnel of the
market monitor are professionally and financially independent from
market participants and consumer market segments described by
Section 39.151(g). The commission shall develop and implement
policies that clearly separate the policy-making responsibilities
of the commission and the operational responsibilities of the
market monitor.
(f) The market monitor immediately shall confidentially
report directly to the commission any potential market power abuses
and any discovered or potential violations of commission rules or
rules of the independent organization that involve markets
administered by the independent organization.
(g) The personnel of the market monitor may communicate with
any person, including the commission, in accordance with commission
rules and with independent organization procedures.
(h) The market monitor annually shall submit to the
commission and the independent organization a report that
identifies market design flaws and recommends methods to correct
the flaws. The commission and the independent organization shall
review the report and evaluate whether changes to rules of the
commission or the independent organization should be made. The
report shall be made available to the public.
(i) The market monitor shall comply with this title,
commission rules and orders, and bylaws of the independent
organization. The market monitor shall perform the monitor's
functions in a manner that ensures the confidentiality of
information that is customer proprietary information,
competitively sensitive, or otherwise confidential or privileged
under this title, commission rules or orders, procedures or bylaws
of the independent organization, or other law.
(j) This section does not apply to an independent
organization established to serve areas located outside of ERCOT.
SECTION 12. Section 39.155(a), Utilities Code, is amended
to read as follows:
(a) Each person, municipally owned utility, electric
cooperative, and river authority that owns generation facilities
and offers electricity for sale in this state shall report to the
commission its installed generation capacity, the total amount of
capacity available for sale to others, the total amount of capacity
under contract to others, the total amount of capacity dedicated to
its own use, its annual wholesale power sales in the state, its
annual retail power sales in the state, and any other information
necessary for the commission to assess market power or the
development of a competitive retail market in the state. The
commission shall by rule prescribe the nature and detail of the
reporting requirements and shall administer those reporting
requirements in a manner that ensures the confidentiality of
competitively sensitive information. This subsection does not
affect the applicability of Chapter 552, Government Code. The
commission, after a contested case hearing or an opportunity for a
contested case hearing, and after allowing a reasonable period for
judicial review under Subchapter A, Chapter 15, may release to the
public any information in the commission's possession if the
commission finds that:
(1) the information is not competitively sensitive or
privileged or confidential by law; and
(2) the release of the information is in the public
interest.
SECTION 13. Section 39.157(a), Utilities Code, is amended
to read as follows:
(a) The commission shall monitor market power associated
with the generation, transmission, distribution, and sale of
electricity in this state. On a finding that market power abuses or
other violations of this section are occurring, the commission
shall require reasonable mitigation of the market power by ordering
the construction of additional transmission or distribution
facilities, by seeking an injunction or civil penalties as
necessary to eliminate or to remedy the market power abuse or
violation as authorized by Chapter 15, by imposing an
administrative penalty as authorized by Chapter 15, requiring
refunds or disgorgement of unjust profits received as a result of
market power abuse, or [by] suspending, revoking, or amending a
certificate or registration as authorized by Section 39.356.
Section 15.024(c) does not apply to an administrative penalty
imposed under this section. For purposes of this subchapter,
market power abuses are practices by persons possessing market
power that are unreasonably discriminatory or tend to unreasonably
restrict, impair, or reduce the level of competition, including
practices that tie unregulated products or services to regulated
products or services or unreasonably discriminate in the provision
of regulated services. For purposes of this section, "market power
abuses" include predatory pricing, withholding of production,
precluding entry, and collusion. A violation of the code of conduct
provided by Subsection (d) that materially impairs the ability of a
person to compete in a competitive market shall be deemed to be an
abuse of market power. The possession of a high market share in a
market open to competition may not, of itself, be deemed to be an
abuse of market power; however, this sentence shall not affect the
application of state and federal antitrust laws.
SECTION 14. Section 39.203, Utilities Code, is amended by
adding Subsection (i) to read as follows:
(i) A power generation company that was operating in this
state on January 1, 2005, is not subject to a commission requirement
to pay all or part of the cost of any new transmission facility
necessary to transmit power from an upgrade of, repowering of, or
addition to a generating facility in this state operated by the
power generation company on January 1, 2005. This subsection
expires September 1, 2010.
SECTION 15. Section 39.205, Utilities Code, is amended to
read as follows:
Sec. 39.205. REGULATION OF COSTS FOLLOWING FREEZE PERIOD.
At the conclusion of the freeze period, any remaining costs
associated with nuclear decommissioning obligations continue to be
subject to cost of service rate regulation and shall be included as
a nonbypassable charge to retail customers. The commission may
adopt rules necessary to ensure that money for decommissioning is
prudently collected, managed, and spent for its intended purpose
and that money that remains unspent after decommissioning is
completed is returned to retail customers.
SECTION 16. Section 39.262(c), Utilities Code, is amended
to read as follows:
(c) After January 10, 2004, at a schedule and under
procedures to be determined by the commission, each transmission
and distribution utility, its affiliated retail electric provider,
and its affiliated power generation company shall jointly file to
finalize stranded costs under Subsections (h) and (i) and reconcile
those costs with the estimated stranded costs used to develop the
competition transition charge in the proceeding held under Section
39.201. Any resulting difference shall be applied to the
nonbypassable delivery rates of the transmission and distribution
utility, except that at the utility's option, any or all of the
amounts recovered under this section [remaining stranded costs] may
be securitized under Subchapter G.
SECTION 17. Section 39.301, Utilities Code, is amended to
read as follows:
Sec. 39.301. PURPOSE. The purpose of this subchapter is to
enable utilities to use securitization financing to recover
regulatory assets, all other amounts determined under Section
39.262, and any amounts being recovered under a competition
transition charge determined as a result of a proceeding under
Section 39.201 or 39.262. This [and stranded costs, because this]
type of debt will lower the carrying costs of the assets relative to
the costs that would be incurred using conventional utility
financing methods. The proceeds of the transition bonds shall be
used solely for the purposes of reducing the amount of recoverable
regulatory assets and other amounts [stranded costs], as determined
by the commission in accordance with this chapter, through the
refinancing or retirement of utility debt or equity. The
commission shall ensure that securitization provides tangible and
quantifiable benefits to ratepayers, greater than would have been
achieved absent the issuance of transition bonds. The commission
shall ensure that the structuring and pricing of the transition
bonds result in the lowest transition bond charges consistent with
market conditions and the terms of the financing order. The amount
securitized may not exceed the present value of the revenue
requirement over the life of the proposed transition bond
associated with the regulatory assets or stranded costs sought to
be securitized. The present value calculation shall use a discount
rate equal to the proposed interest rate on the transition bonds.
SECTION 18. Section 39.302(4), Utilities Code, is amended
to read as follows:
(4) "Qualified costs" means 100 percent of an electric
utility's regulatory assets and 75 percent of its recoverable costs
determined by the commission under Section 39.201 and any remaining
amounts [stranded costs] determined under Section 39.262 together
with the costs of issuing, supporting, and servicing transition
bonds and any costs of retiring and refunding the electric
utility's existing debt and equity securities in connection with
the issuance of transition bonds. The term includes the costs to
the commission of acquiring professional services for the purpose
of evaluating proposed transactions under Section 39.201 and this
subchapter.
SECTION 19. Sections 39.303(a) and (b), Utilities Code, are
amended to read as follows:
(a) The commission shall adopt a financing order, on
application of a utility to recover the utility's regulatory assets
and other amounts determined [eligible stranded costs] under
Section 39.201 or 39.262, on making a finding that the total amount
of revenues to be collected under the financing order is less than
the revenue requirement that would be recovered over the remaining
life of the stranded costs using conventional financing methods and
that the financing order is consistent with the standards in
Section 39.301.
(b) The financing order shall detail the amount of
regulatory assets and other amounts [stranded costs] to be
recovered and the period over which the nonbypassable transition
charges shall be recovered, which period may not exceed 15 years.
SECTION 20. Chapter 39, Utilities Code, is amended by
adding Subchapter K to read as follows:
SUBCHAPTER K. TRANSITION TO COMPETITION FOR CERTAIN
AREAS OUTSIDE OF ERCOT
Sec. 39.501. APPLICABILITY. (a) This subchapter applies
to any multistate electric utility operating solely outside of
ERCOT that is serving customers in areas of this state within the
Western Electricity Coordinating Council.
(b) The legislature finds that the power region in which an
electric utility subject to this subchapter provides electric
service is unable at this time to offer fair competition and
reliable service to all retail customer classes in this state. As a
result, the introduction of retail competition for the portions of
that power region in this state is delayed until fair competition
and reliable service are available to all retail customer classes.
Sec. 39.502. COST-OF-SERVICE REGULATION. (a) Until the
date on which an electric utility subject to this subchapter is
authorized by the commission to implement retail customer choice,
the rates of the utility are subject to regulation under Chapter 36.
(b) Until the date on which an electric utility subject to
this subchapter implements customer choice, the provisions of this
chapter, other than this subchapter and Sections 39.903(g), 39.904,
and 39.905, do not apply to that utility.
(c) In accordance with Section 39.904, an electric utility
subject to this subchapter shall obtain, at a minimum, renewable
energy credits in an amount sufficient to meet the requirements for
the compliance period beginning January 1, 2006, and for each
compliance period after that date.
(d) In accordance with Section 39.905, an electric utility
subject to this subchapter shall begin administering energy
efficiency programs on January 1, 2006. The utility shall meet, at
a minimum, five percent of its growth in demand through energy
efficiency savings resulting from those programs by January 1,
2007, and 10 percent of its growth in demand by January 1, 2008, and
each year after that date.
Sec. 39.503. TRANSITION TO COMPETITION. (a) The sequence
of events prescribed by Subsections (b)-(f) shall be followed to
introduce retail competition in the service area of an electric
utility subject to this subchapter. All listed items in a
subsection must be completed before the events provided by the next
subsection are initiated. Full retail competition may not begin in
the service area of the utility until all actions prescribed by
those subsections are completed.
(b) The first stage for the transition to competition
consists of the following activities:
(1) approval of a regional transmission organization
by the Federal Energy Regulatory Commission for the power region
that includes the electric utility's service area and commencement
of independent operation of the transmission network under the
approved regional transmission organization;
(2) development of retail market protocols to
facilitate retail competition; and
(3) completion of an expedited proceeding to develop
non-bypassable delivery rates for the customer choice pilot project
to be implemented under Subsection (c)(1).
(c) The second stage for the transition to competition
consists of the following activities:
(1) initiation of the customer choice pilot project in
accordance with Section 39.104;
(2) development of a balancing energy market, a market
for ancillary services, and a market-based congestion management
system for the wholesale market in the power region in which the
regional transmission organization operates; and
(3) implementation of a seams agreement with adjacent
power regions to reduce barriers to entry and facilitate
competition.
(d) The third stage for the transition to competition
consists of the following activities:
(1) the electric utility filing with the commission:
(A) an application for business separation in
accordance with Section 39.051;
(B) an application for unbundled transmission
and distribution rates in accordance with Section 39.201;
(C) an application for certification of a
qualified power region in accordance with Section 39.152; and
(D) an application for price-to-beat rates in
accordance with Section 39.202;
(2) the commission:
(A) approving a business separation plan for the
utility;
(B) setting unbundled transmission and
distribution rates for the utility;
(C) certifying a qualified power region, which
includes conducting a formal evaluation of wholesale market power
in the region, in accordance with Section 39.152;
(D) setting price-to-beat rates for the utility;
and
(E) determining which competitive energy
services must be separated from regulated utility activities in
accordance with Section 39.051; and
(3) completion of the testing of retail and wholesale
systems, including those systems necessary for switching customers
to the retail electric provider of their choice and for settlement
of wholesale market transactions, by the regional transmission
organization, the statewide registration agent, and market
participants.
(e) The fourth stage for the transition to competition
consists of the following activities:
(1) commission evaluation of the results of the pilot
project;
(2) initiation by the electric utility of a capacity
auction in accordance with Section 39.153 at a time to be determined
by the commission; and
(3) separation by the utility of competitive energy
services from its regulated utility activities, in accordance with
the commission order approving the separation of competitive energy
services.
(f) The fifth stage for the transition to competition
consists of the following activities:
(1) evaluation by the commission of whether the power
region that includes the electric utility can offer fair
competition and reliable service to all retail customer classes,
and:
(A) if the commission concludes that the power
region can offer fair competition and reliable service to all
retail customer classes, the commission issuing an order initiating
retail competition for the utility; and
(B) if the commission determines that the power
region cannot offer fair competition and reliable service to all
retail customer classes, the commission issuing an order further
delaying retail competition for the utility; and
(2) on the issuance of an order from the commission
initiating retail competition for the utility, completion by the
utility of the business separation and unbundling in accordance
with the commission order approving the unbundling.
(g) After the requirements of Subsection (b) are fully
completed and upon a finding of good cause, as determined by the
commission after notice and hearing, the sequence for retail
competition set forth in this section may be modified by commission
order.
SECTION 21. Section 39.902(c), Utilities Code, is amended
to read as follows:
(c) After the opening of the retail electric market, the
commission shall conduct ongoing customer education designed to
help customers make informed choices of electric services and
retail electric providers. As part of ongoing education, the
commission shall [may] provide or may make available to customers
information concerning specific retail electric providers,
including instances of complaints against them and records relating
to quality of customer service.
SECTION 22. Section 39.903(a), Utilities Code, as amended
by Chapters 211 and 1296, Acts of the 78th Legislature, Regular
Session, 2003, is reenacted and amended to read as follows:
(a) The system benefit fund is an account in the general
revenue fund. Money in the account may be appropriated only for the
purposes provided by this section [or other law]. Interest earned
on the system benefit fund shall be credited to the fund. Section
403.095, Government Code, does not apply to the system benefit
fund.
SECTION 23. Section 39.903(e), Utilities Code, as amended
by Chapters 1394, 1451, and 1466, Acts of the 77th Legislature,
Regular Session, 2001, is reenacted and amended to read as follows:
(e) Money in the system benefit fund may be appropriated to
provide funding solely for the following [regulatory] purposes,
[and] in the following order of priority:
(1) programs to assist low-income electric customers
by providing the 10 to 20 percent reduced rate prescribed by
Subsection (h);
(2) customer education programs, administrative
expenses incurred by the commission in implementing and
administering this chapter, and expenses incurred by the office
under this chapter;
(3) programs to assist low-income electric customers
by providing the targeted energy efficiency programs described by
Subsection (f)(2); and
(4) the school funding loss mechanism provided by
Section 39.901 [;
[(5) programs to assist low-income electric customers
by providing the 20 percent reduced rate prescribed by Subsection
(h); and
[(6) reimbursement to the commission and the Texas
Department of Human Services for expenses incurred in the
implementation and administration of an integrated eligibility
process created under Section 17.007 for customer service discounts
relating to retail electric service, including outreach expenses
the commission determines are reasonable and necessary].
SECTION 24. Section 39.903, Utilities Code, is amended by
adding Subsection (e-1) to read as follows:
(e-1) In addition to the purposes and priorities provided by
Subsection (e), the commission may use money from the system
benefit fund to educate residential and small business customers of
available benefits of the fund. The purpose for which money may be
used under this subsection has the same priority as the purpose
prescribed by Subsection (e)(1). This subsection expires August
31, 2006.
SECTION 25. Section 39.903(g), Utilities Code, is amended
to read as follows:
(g) Until customer choice is introduced in a power region,
an electric utility may not reduce, in any manner, programs already
offered to assist low-income electric customers. Notwithstanding
any other provision of this chapter, this subsection applies to an
electric utility operating outside ERCOT.
SECTION 26. Section 39.903(j), Utilities Code, is amended
to read as follows:
(j) The commission shall adopt rules providing for methods
of enrolling customers eligible to receive reduced rates under
Subsection (h). The rules must provide for automatic enrollment as
one enrollment option. The Health and Human Services Commission
[Texas Department of Human Services], on request of the commission,
shall assist in the adoption and implementation of these rules. The
commission and the Health and Human Services Commission [Texas
Department of Human Services] shall enter into a memorandum of
understanding establishing the respective duties of the agencies
[commission and the department] in relation to the automatic
enrollment. The commission shall establish a goal under this
subsection of enrolling at least 95 percent of customers eligible
to receive reduced rates under Subsection (h). Not later than
December 1 of each even-numbered year, the commission shall
estimate the total number of customers who are eligible for the
reduced rates and shall compare the number of enrolled customers to
that goal. If the goal has not been met, the commission shall use
money from the fund that is available to the commission for
administrative purposes to provide education and outreach
concerning programs available under this section until the goal is
met. The commission shall prepare a report each calendar quarter
with information concerning the enrollment of customers eligible
for the reduced rates and efforts to meet the goal prescribed by
this subsection. The commission shall compile the information into
an annual report to be published for public distribution not later
than January 1 of each odd-numbered year. The commission shall send
a copy of each quarterly and annual report to each member of the
legislature and the electric utility restructuring legislative
oversight committee. In estimating under this subsection the
number of customers who are eligible for the reduced rates, the
commission shall use information provided by the Health and Human
Services Commission regarding persons who meet the definition of
"low-income electric customer," according to household income or
participation in a program described by Subsection (l). The Health
and Human Services Commission shall provide the information to the
commission each calendar quarter.
SECTION 27. Section 39.903(l), Utilities Code, is amended
to read as follows:
(l) For the purposes of this section, a "low-income electric
customer" is an electric customer:
(1) whose household income is not more than 125
percent of the federal poverty guidelines; or
(2) who:
(A) receives food stamps or medical assistance
from the Health and Human Services Commission;
(B) receives federal housing assistance; or
(C) has a child enrolled in the national school
lunch program of free or reduced-price lunches [Texas Department of
Human Services or medical assistance from a state agency
administering a part of the medical assistance program].
SECTION 28. Section 39.904(d), Utilities Code, is amended
to read as follows:
(d) In this section, "renewable energy technology" means
any technology that exclusively relies on an energy source that is
naturally regenerated over a short time and derived directly from
the sun, indirectly from the sun, or from moving water or other
natural movements and mechanisms of the environment. Renewable
energy technologies include those that rely on energy derived
directly from the sun, on wind, geothermal, hydroelectric, wave,
gasification of municipal solid waste, or tidal energy, or on
biomass or biomass-based waste products, including landfill gas. A
renewable energy technology does not rely on energy resources
derived from fossil fuels, waste products from fossil fuels, or
waste products from inorganic sources. In this subsection,
"municipal solid waste" means nondurable goods, containers and
packaging, food wastes, yard trimmings, and miscellaneous biomass
wastes from residential, commercial, and industrial nonprocess
sources. Renewable energy credits may not be issued for nondurable
goods or containers and packaging.
SECTION 29. Section 40.001(a), Utilities Code, is amended
to read as follows:
(a) Notwithstanding any other provision of law, except
Sections 39.151(j), 39.155, 39.157(a) and (e) [39.157(e)], 39.203,
39.903, and 39.904, this chapter governs the transition to and the
establishment of a fully competitive electric power industry for
municipally owned utilities. With respect to the regulation of
municipally owned utilities, this chapter controls over any other
provision of this title, except for sections in which the term
"municipally owned utility" is specifically used.
SECTION 30. Section 41.001, Utilities Code, is amended to
read as follows:
Sec. 41.001. APPLICABLE LAW. Notwithstanding any other
provision of law, except Sections 39.151(j), 39.155, 39.157(a) and
(e) [39.157(e)], 39.203, 39.903, and 39.904, this chapter governs
the transition to and the establishment of a fully competitive
electric power industry for electric cooperatives. Regarding the
regulation of electric cooperatives, this chapter shall control
over any other provision of this title, except for sections in which
the term "electric cooperative" is specifically used.
SECTION 31. Subtitle D, Title 16, Property Code, is amended
by adding Chapter 431 to read as follows:
CHAPTER 431. ENERGY-EFFICIENT BUILDING PROGRAM
Sec. 431.001. DEFINITION. In this chapter, "National
Housing Act" means Section 203(b), (i), or (k) of the National
Housing Act (12 U.S.C. Sections 1709(b), (i), and (k)).
Sec. 431.002. ENERGY-EFFICIENT BUILDING ACCREDITATION
PROGRAM. (a) The commission, in consultation with the Energy
Systems Laboratory at the Texas Engineering Experiment Station of
The Texas A&M University System, the Texas Commission on
Environmental Quality, and an advisory committee appointed by the
commission, may establish an energy-efficient building
accreditation program for buildings that exceed the building energy
performance standards under Section 388.003, Health and Safety
Code, by 15 percent or more.
(b) If the commission establishes a program under this
chapter, the commission, in consultation with the Energy Systems
Laboratory, shall update the program on or before December 1 of each
even-numbered year using the best available energy-efficient
building practices.
(c) If the commission establishes a program under this
chapter, the program must include a checklist system to produce an
energy-efficient building scorecard to help:
(1) home buyers compare potential homes and, by
providing a copy of the completed scorecard to a mortgage lender,
qualify for energy-efficient mortgages under the National Housing
Act; and
(2) communities qualify for emissions reduction
credits by adopting codes that meet or exceed the energy-efficient
building or energy performance standards established under Chapter
388, Health and Safety Code.
Sec. 431.003. PUBLIC INFORMATION PROGRAM. The commission
may establish a public information program to inform homeowners,
sellers, buyers, and others regarding energy-efficient building
ratings.
Sec. 431.004. MEASUREMENT SYSTEM FOR REDUCTION IN ENERGY
AND EMISSIONS. If the commission establishes a program under this
chapter, the Energy Systems Laboratory shall establish a system to
measure the reduction in energy and emissions produced under the
energy-efficient building program and report those savings to the
commission.
Sec. 431.005. CERTIFICATION FEE. If the commission
establishes a program under this chapter, the commission may set a
certification fee sufficient to cover the cost of administering the
program and pay for any education efforts conducted under this
chapter.
SECTION 32. Section 52.254, Utilities Code, is repealed.
SECTION 33. Section 388.009, Health and Safety Code, as
added by Section 17, Chapter 1331, Acts of the 78th Legislature,
Regular Session, 2003, is repealed.
SECTION 34. The change in law made by this Act relating to
qualifications and eligibility to serve as a commissioner or to be
employed with the Public Utility Commission of Texas applies only
to a commissioner or employee appointed or employed after the
effective date of this Act. A commissioner or employee of the
Public Utility Commission of Texas who is serving or employed on the
effective date of this Act is governed by the law as it existed
immediately before the effective date of this Act, and the former
law is continued in effect for that purpose.
SECTION 35. An independent organization certified by the
Public Utility Commission of Texas before September 1, 2005, shall
modify the organization's governing body to comply with Section
39.151(g), Utilities Code, as amended by this Act, not later than
January 1, 2006. On or after January 1, 2006, the Public Utility
Commission of Texas may decertify an independent organization whose
governing body does not comply with Section 39.151(g), Utilities
Code, as amended by this Act.
SECTION 36. The system benefit fund described by Section
39.903, Utilities Code, as amended by this Act, is re-created as a
separate account in the general revenue fund, and money in the
account is rededicated for the purposes described by that section.
SECTION 37. The Public Utility Commission of Texas shall
adopt rules required by Section 39.903, Utilities Code, as amended
by this Act, not later than January 1, 2006.
SECTION 38. Before implementing a new wholesale
transmission and distribution market design, the Public Utility
Commission of Texas shall provide to the Senate Committee on
Business and Commerce and the House Committee on Regulated
Industries a report that contains:
(1) an executive summary and detailed description of
the changes in the wholesale transmission and distribution market
that the commission has ordered, including the effect the new
market design is anticipated to have on local congestion costs;
(2) a list of entities, associations, and groups that
have submitted comments to the commission on the new market design,
classified by whether the comments indicated support for or
opposition to the new market design;
(3) a comparison of the new market design to any
similar market design adopted in any other state;
(4) a timeline for the implementation of the new
market design, including estimated costs of implementation;
(5) the estimated increases in wholesale and retail
electricity prices that will be caused in each county in this state
by the new market design, projected over the first five years after
the date the new design will be implemented; and
(6) the names, business addresses, and telephone
numbers of the members of the Texas Nodal Team and of any other
quasi-official working group that recommends to the commission the
adoption of the new market design.
SECTION 39. (a) It is the policy of this state to ensure
that all electric customers in ERCOT, including low-income
customers and customers in rural and other high-cost areas, have
access to electric energy service at reasonable rates.
(b) The Public Utility Commission of Texas shall conduct a
study to determine methods or mechanisms to ensure that residential
customers who are currently being served by an affiliated retail
electric provider at the "price-to-beat" rate will continue to have
default electric service available at reasonable rates. On
September 1, 2005, the commission shall begin the review required
by this subsection. The review must include the methods other
competitive regions, including Ohio, Maine, Maryland,
Massachusetts, and New Jersey, use to provide default services to
residential customer classes at reasonable rates.
(c) The study required by Subsection (b) of this section
must:
(1) evaluate:
(A) extending or modifying the "price-to-beat";
(B) local governmental aggregation, including
municipal "opt-out" mechanisms; and
(C) competitive procurement load auctions; and
(2) compare, regarding various mechanisms or methods
considered:
(A) resulting prices for service at wholesale;
(B) resulting prices for service at retail;
(C) key features of each mechanism or method and
key differences between the mechanisms or methods;
(D) the level of wholesale supplier competition
under each mechanism or method, measured by factors such as:
(i) numbers of participants;
(ii) volumes bid; or
(iii) other relevant factors; and
(E) any other factors or variables the commission
considers necessary to arrive at a conclusion and to make
recommendations under this section.
(d) The Public Utility Commission of Texas shall conclude
the study under this section not later than February 1, 2006, and
shall determine at that time a mechanism by which residential
customers served by an affiliated retail electric provider will be
able to receive the lowest cost default electric service on and
after January 1, 2007.
(e) The Public Utility Commission of Texas shall present a
report of the study and the recommendations made as a result of the
study to the Joint Electric Utility Restructuring Legislative
Oversight Committee on or before March 1, 2006.
(f) The Joint Electric Utility Restructuring Legislative
Oversight Committee shall hold hearings on the study and
recommendations in each region of the state served by an affiliated
retail electric provider and, following the hearings, shall make
recommendations to the 80th Legislature on the best means to
provide residential customers default electric service at the
lowest cost.
SECTION 40. The Public Utility Commission of Texas shall
conduct a study of the effects of a utility controlling 20 percent
or more of the installed generation capacity inside an ERCOT zonal
boundary or a functional market recognized by that commission on
the price of electricity to consumers, including consumers in the
zonal boundary and throughout ERCOT. The Public Utility Commission
of Texas shall submit a report of the study to the legislature on or
before January 1, 2007.
SECTION 41. (a) The Public Utility Commission of Texas, as
a part of the commission's continuing analysis of reserve margins
and capacity needs for the ERCOT system, shall consider creating
and may establish a new alternative market mechanism to allow a
potential interruptible industrial load that is greater than one
megawatt and that will not be participating in the ERCOT market to
be treated as a "load acting as a resource" and to allow
compensation for that treatment.
(b) The legislature finds that Texas businesses that are
able to participate in an alternative interruptible service compete
in interstate and global markets and that the opportunity for the
businesses to be compensated for their interruptible loads is
essential to the businesses' ability to remain competitive and to
provide significant benefits to the economy of this state. The
Public Utility Commission of Texas shall consider these economic
benefits in analyzing the potential of interruptible service. Not
later than January 1, 2006, the Public Utility Commission of Texas
shall report any actions taken regarding interruptible service and
the results of its analysis of interruptible service to the
governor, lieutenant governor, speaker of the house of
representatives, and presiding officers of each legislative
committee with jurisdiction over electric services.
SECTION 42. This Act takes effect September 1, 2005.