79R4278 JJT-F
By: Armbrister S.B. No. 764
A BILL TO BE ENTITLED
AN ACT
relating to regulation of electric generation capacity in the
electric power market.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 39.153, Utilities Code, is amended by
amending Subsections (e) and (f) and adding Subsection (a-1) to
read as follows:
(a-1) Not later than September 30, 2006, each electric
utility subject to this section shall sell at auction or otherwise
divest additional entitlements to the utility's Texas
jurisdictional installed generation so that a utility does not
control more than:
(1) 20 percent of installed generation capacity in
ERCOT; or
(2) 20 percent of the installed generation capacity
inside an ERCOT zonal boundary or a functional market recognized by
the commission.
(e) The commission shall adopt rules by December 31, 2000,
that define the scope of the initial capacity entitlements to be
auctioned and shall adopt additional rules not later than December
31, 2005, that define the scope of the auctions necessary to comply
with Subsection (a-1). Entitlements may be auctioned in blocks of
less than 15 percent. The rules shall state the minimum amount of
capacity that can be sold at auction as an entitlement. At a
minimum, the rules shall provide that the entitlements:
(1) may be sold and purchased in periods of not less
than one month nor more than four years;
(2) may be resold to any lawful purchaser, except for a
retail electric provider affiliated with the electric utility that
originally auctioned the entitlement;
(3) include no possessory interest in the unit from
which the power is produced;
(4) include no obligations of a possessory owner of an
interest in the unit from which the power is produced; and
(5) give the purchaser the right to designate the
dispatch of the entitlement, subject to planned outages, outages
beyond the control of the utility operating the unit, and other
considerations subject to the oversight of the applicable
independent organization.
(f) The commission shall adopt rules by December 31, 2000,
that prescribe the procedure for the auction of the entitlements as
required by Subsection (a). If necessary, the commission may adopt
additional rules that prescribe the procedure for the auction of
the entitlements as required by Subsection (a-1). The rules shall
include:
(1) a process for conducting the auction or auctions,
including who shall conduct it, how often it shall be conducted, and
how winning bidders shall be determined;
(2) a process for the electric utility to designate
which generation units or combination of units are offered for
auction;
(3) a provision for the utility to establish an
opening bid price based on the electric utility's expected cost,
with the commission prescribing the means for determining the
opening bid price, which may not include return on equity; and
(4) a provision that allows a bidder to specify the
magnitude and term of the entitlement, subject to the conditions
established in Subsection (e).
SECTION 2. Sections 39.154(a) and (c), Utilities Code, are
amended to read as follows:
(a) Beginning on the date of introduction of customer
choice, a power generation company may not own and control more than
20 percent of the installed generation capacity located in, or
capable of delivering electricity to, a power region, zone, or
functional market recognized by the commission in a power region.
(c) In determining the percentage shares of installed
generation capacity under this section, the commission shall
combine capacity owned and controlled by a power generation company
and any entity that is affiliated with that power generation
company within the power region, zone, or functional market
recognized by the commission in the power region, reduced by the
installed generation capacity of those facilities that are made
subject to capacity auctions under Sections 39.153(a) and (d).
SECTION 3. Sections 39.156(b) and (g), Utilities Code, are
amended to read as follows:
(b) An electric utility or power generation company that
owns and controls [owning and controlling] more than 20 percent of
the generation capacity located in, or capable of delivering
electricity to, a power region, zone, or functional market
recognized by the commission in the power region shall file a market
power mitigation plan with the commission not later than the 90th
day after the date the electric utility's or power generation
company's generation capacity exceeds the 20 percent limitation
prescribed by this subsection [December 1, 2000].
(g) In reaching its determination under Subsection (f), the
commission shall consider:
(1) the degree to which the electric utility's or power
generation company's stranded costs, if any, are minimized;
(2) whether on disposition of the generation assets
the reasonable value is likely to be received;
(3) the effect of the plan on the electric utility's or
power generation company's federal income taxes;
(4) the effect of the plan on current and potential
competitors in the generation market; [and]
(5) whether the plan is consistent with the public
interest;
(6) the ownership of generation resources in a zone;
(7) the control of generation through the use of
contracts between affiliated retail electric providers and
independent power producers; and
(8) the emissions credits owned or controlled in a
nonattainment area for national ambient air quality standards.
SECTION 4. Section 39.153(b), Utilities Code, is repealed.
SECTION 5. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2005.