79R4414 JJT-F
By: King of Parker H.B. No. 1777
A BILL TO BE ENTITLED
AN ACT
relating to regulation of the electric power market.
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 utility on behalf of itself or any provider
of a product or service.
(2) "Billing 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 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 utility to
bill for products and services on the billing 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 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
(3) [(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 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 utility
that a customer has reported to the billing 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 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 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 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
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 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
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 utility shall
provide notice of a customer's rights under this section in the
manner prescribed by the commission.
(b) 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 utility
shall send the notice 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
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 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 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 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 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 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 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 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 utility, service provider,
retail electric provider, or electric utility to refund or credit
overcharges or unauthorized charges with interest if the billing
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:
(1) consider the factors prescribed by Rule 1.04,
Texas Disciplinary Rules of Professional Conduct; and
(2) limit the amount of attorney's fees recovered to an
amount rationally related to and approximately proportional to the
municipality's interest as compared to the interests of other
parties in the overall ratemaking proceeding.
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. Section 38.001, Utilities Code, is amended to
read as follows:
Sec. 38.001. GENERAL STANDARD. An electric utility, a
municipally owned utility, a power generation company, 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 6. 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, retail electric provider, municipally owned utility,
electric cooperative, power marketer, independent organization
certified under Section 39.151, or power generation company, 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;
(2) suspend, revoke, or amend an electric utility's or
transmission and distribution utility's certificate of public
convenience and necessity;
(3) suspend, revoke, or amend a retail electric
provider's certificate;
(4) suspend or revoke a power marketer's registration;
or
(5) suspend or revoke a power generation company's
registration.
SECTION 7. 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. 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 8. Section 39.103, Utilities Code, is amended to
read as follows:
Sec. 39.103. COMMISSION AUTHORITY TO DELAY COMPETITION AND
SET NEW RATES. (a) If the commission determines under Section
39.104 that a power region is unable to offer fair competition and
reliable service to all retail customer classes on January 1, 2002,
the commission shall delay customer choice for the power region and
may on or after January 1, 2002, establish new rates for all
electric utilities in the power region as provided by Chapter 36.
(b) In the event of a catastrophic occurrence that causes a
disruption of electricity markets and that the governor declares
has resulted in an energy emergency, the commission may suspend
competitive wholesale and retail market rules and set rates.
(c) The commission by rule shall provide for an expedited
procedure to exercise its authority under Subsection (b), including
provisions for notifying affected persons.
(d) The commission is not required to conduct a contested
case to exercise its authority under Subsection (b).
(e) If the commission determines, after a contested case
hearing or an opportunity for a contested case hearing, that a
person violated a commission order issued under Subsection (b), the
commission may:
(1) order the person to refund any compensation the
person obtained as a result of the violation;
(2) assess an administrative penalty against the
person; or
(3) take any action against the person authorized by
Sections 38.005(h)(2)-(5).
SECTION 9. Section 39.151, Utilities Code, is amended by
amending Subsections (b), (c), (d), (e), (g), and (j) and adding
Subsections (g-1)-(g-5) 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 operations 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, and approval. 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 bylaws or protocols
must be approved by the commission and must reflect the input of the
commission. The bylaws or protocols must prescribe professional
qualifications for selection as a member, require the use of a
professional search firm to identify candidates for membership, and
specify the process by which appropriate stakeholders elect
members. 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 counselor [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) six 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) In voting on a matter before the governing body,
members must have their votes counted as provided by this
subsection. The member described by Subsection (g)(3) has one
vote. The members described by:
(1) Subsection (g)(4) have two votes each;
(2) Subsections (g)(2), (5), and (6) have two votes
each; and
(3) Subsection (g)(7), including the presiding
officer, have three votes each.
(g-3) A quorum of the governing body is present only when:
(1) at least four of the members described by
Subsections (g)(3) and (7) are present; and
(2) a number of other members are present so that at
least nine members are present.
(g-4) The governing body by rule or bylaw may limit the time
members described by Subsections (g)(2), (4), (5), and (6) may
present evidence, arguments, or questions during a meeting of the
body.
(g-5) 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 revenues
that accrue as a result of a violation of this subsection.
SECTION 10. 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 may 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, or other information 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 and the
planned agendas of the meetings and an opportunity to comment on
matters under discussion at the meetings.
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.
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 state's wholesale electric market monitor and to detect and
prevent market manipulation strategies.
(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 the commission
determines is 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 authority
necessary to monitor the wholesale electric market effectively and
shall adopt rules and perform oversight of the market monitor as
necessary. 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; and
(4) ethical standards for the market monitor and the
personnel of the market monitor.
(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. 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 report directly to
the commission any potential market manipulations and any
discovered or potential violations of commission rules or rules of
the independent organization.
(g) The personnel of the market monitor may communicate with
commission staff on any matter without restriction.
(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.
SECTION 11. 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. The commission, after a
contested case hearing or an opportunity for a contested case
hearing, 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
confidential by law; and
(2) the release of the information is in the public
interest.
SECTION 12. 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 revenues 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 13. 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 14. Section 39.903(a), 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 15. 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 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);
(4) the school funding loss mechanism provided by
Section 39.901; and
(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 16. Section 39.903(h), Utilities Code, is amended
to read as follows:
(h) The commission shall adopt rules for a retail electric
provider to determine a reduced rate for eligible customers to be
discounted off the standard retail service package as approved by
the commission under Section 39.106, or the price to beat
established by Section 39.202, whichever is lower. Municipally
owned utilities and electric cooperatives shall establish a reduced
rate for eligible customers to be discounted off the standard
retail service package established under Section 40.053 or 41.053,
as appropriate. The reduced rate for a retail electric provider
shall result in a total charge that is at least 10 percent and, if
sufficient money in the system benefit fund is available, up to 20
percent, lower than the amount the customer would otherwise be
charged. To the extent the system benefit fund is insufficient to
fund the initial 10 percent rate reduction, the commission may
increase the fee to an amount not more than 65 cents per megawatt
hour, as provided by Subsection (b). If the fee is set at 65 cents
per megawatt hour and the commission determines that the system
benefit fund is still insufficient to fund the 10 percent rate
reduction for any reason, the commission may reduce the rate
reduction to less than 10 percent. For a municipally owned utility
or electric cooperative, the reduced rate shall be equal to an
amount that can be fully funded by that portion of the nonbypassable
fee proceeds paid by the municipally owned utility or electric
cooperative that is allocated to the utility or cooperative by the
commission under Subsection (e) for programs for low-income
customers of the utility or cooperative. The reduced rate for
municipally owned utilities and electric cooperatives under this
section is in addition to any rate reduction that may result from
local programs for low-income customers of the municipally owned
utilities or electric cooperatives.
SECTION 17. 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 18. 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 19. Section 52.254, Utilities Code, is repealed.
SECTION 20. 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 21. 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 22. This Act takes effect September 1, 2005.