79R12772 MTB-F


By:  Averitt                                                      S.B. No. 1447

Substitute the following for S.B. No. 1447:                                   

By:  Flynn                                                    C.S.S.B. No. 1447



A BILL TO BE ENTITLED

AN ACT

relating to including pension and other postemployment benefits in 
the computation of rates for electric utilities.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Subchapter B, Chapter 36, Utilities Code, is 
amended by adding Section 36.065 to read as follows:
	Sec. 36.065.  PENSION AND OTHER POSTEMPLOYMENT BENEFITS.  
(a)  The regulatory authority shall include in the rates of an 
electric utility expenses for pension and other postemployment 
benefits, as determined by actuarial or other similar studies in 
accordance with generally accepted accounting principles, in an 
amount the regulatory authority finds reasonable.  Expenses for 
pension and other postemployment benefits include, in an amount 
found reasonable by the regulatory authority, the benefits 
attributable to the service of employees who were employed by the 
predecessor integrated electric utility of an electric utility 
before the utility's unbundling under Chapter 39 irrespective of 
the business activity performed by the employee or the affiliate to 
which the employee was transferred on or after the unbundling.
	(b)  Effective January 1, 2005, an electric utility may 
establish one or more reserve accounts for expenses for pension and 
other postemployment benefits.  An electric utility shall 
periodically record in the reserve account any difference between:
		(1)  the annual amount of pension and other 
postemployment benefits approved as an operating expense in the 
electric utility's last general rate proceeding or, if that amount 
cannot be determined from the regulatory authority's order, the 
amount recorded for pension and other postemployment benefits under 
generally accepted accounting principles during the first year that 
rates from the electric utility's last general rate proceeding are 
in effect; and
		(2)  the annual amount of pension and other 
postemployment benefits as determined by actuarial or other similar 
studies that are chargeable to the electric utility's operating 
expense.
	(c)  A surplus in the reserve account exists if the amount of 
pension and other postemployment benefits under Subsection (b)(1) 
is greater than the amount determined under Subsection (b)(2).  A 
shortage in the reserve account exists if the amount of pension and 
other postemployment benefits under Subsection (b)(1) is less than 
the amount determined under Subsection (b)(2).
	(d)  If a reserve account for pension and other 
postemployment benefits is established, the regulatory authority 
at a subsequent general rate proceeding shall:
		(1)  review the amounts recorded to the reserve account 
to determine whether the amounts are reasonable expenses;
		(2)  determine whether the reserve account has a 
surplus or shortage under Subsection (c); and
		(3)  subtract any surplus from or add any shortage to  
the electric utility's rate base with the surplus or shortage 
amortized over a reasonable time.
	SECTION 2.  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.