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.