79R12512 CBH-F


By:  Hughes, Frost, Hopson, Merritt, Pickett                      H.B. No. 2644

Substitute the following for H.B. No. 2644:                                   

By:  Hartnett                                                 C.S.H.B. No. 2644


A BILL TO BE ENTITLED
AN ACT
relating to delay in the deregulation of certain electric utilities. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: SECTION 1. Chapter 39, Utilities Code, is amended by adding Subchapters J and K to read as follows:
SUBCHAPTER J. DELAY OF COMPETITION IN CERTAIN NON-ERCOT AREAS
Sec. 39.451. APPLICABILITY. (a) This subchapter applies to an investor-owned electric utility: (1) that is operating solely outside of ERCOT in areas of this state that were included in the Southwest Power Pool on January 1, 2004; (2) that was not affiliated with the Southeastern Electric Reliability Council on January 1, 2004; and (3) to which Subchapter I does not apply. (b) The legislature finds that circumstances exist that require that areas served by an electric utility described by Subsection (a) be treated as areas in which it is not in the public interest to transition to full retail customer choice at this time. Sec. 39.452. REGULATION OF UTILITY AND TRANSITION TO COMPETITION. (a) Until the later of January 1, 2010, or the date on which an electric utility subject to this subchapter is authorized by the commission to implement customer choice, the rates of the electric utility shall be regulated under traditional cost of service regulation and the electric utility is subject to all applicable regulatory authority prescribed by this subtitle and Subtitle A, including Chapters 14, 32, 33, 36, and 37. Until the date on which an electric utility subject to this subchapter implements customer choice, the provisions of this chapter do not apply to that electric utility, other than this subchapter, Sections 39.904 and 39.905, and the provisions relating to the duty to obtain a permit from the Texas Commission on Environmental Quality for an electric generating facility and to reduce emissions from an electric generating facility. (b) On or after January 1, 2010, an electric utility subject to this subchapter may choose to participate in customer choice. An electric utility that chooses to participate in customer choice shall file a transition to competition plan with the commission. The transition to competition plan must identify how electric utilities subject to this subchapter intend to achieve full customer choice, including an evaluation of the transmission facilities, an explanation of how certification of the power region under Section 39.152 will be achieved, auctioning rights to generation capacity, or any other measure that is consistent with the public interest. The utility must also include in the transition to competition plan a provision to establish a price to beat for residential customers and commercial customers having a peak load of 1,000 kilowatts or less. The commission may prescribe additional information or provisions that must be included in the plan. The commission shall approve, modify, or reject a plan within 180 days after the date of a filing under this section unless a hearing is requested by any party to the proceeding. If a hearing is requested, the 180-day deadline will be extended one day for each day of the hearing. The transition to competition plan may be updated or amended, subject to commission approval, until the applicable power region is certified as a qualifying power region under Section 39.152 and the plan is approved. (c) On implementation of customer choice, an electric utility subject to this subchapter is subject to the provisions of this subtitle and Subtitle A to the same extent as other electric utilities, including the provisions of Chapter 37 concerning certificates of convenience and necessity. Sec. 39.453. CUSTOMER CHOICE AND RELEVANT MARKET AND RELATED MATTERS. If an electric utility subject to this subchapter chooses on or after January 1, 2010, to participate in customer choice, the commission may not authorize customer choice until the applicable power region has been certified as a qualifying power region under Section 39.152.
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 Electric 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 39.904 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. SECTION 2. This Act takes effect September 1, 2005.