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By:  Fraser                                                       S.B. No. 1494


A BILL TO BE ENTITLED

AN ACT

relating to the unbundling of electric utilities in the transition 
to competitive retail electric markets.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Section 39.051, Utilities Code, is amended by 
amending Subsection (c) and adding Subsection (c-1) to read as 
follows:
	(c)  An electric utility may accomplish the separation 
required by Subsection (b) either through the creation of separate 
nonaffiliated companies or separate affiliated companies owned by a 
common holding company or through the sale of assets to a third 
party.  An electric utility may create separate transmission and 
distribution utilities.  Notwithstanding any other provision of 
this chapter, an electric utility that on September 1, 2005, has not 
finalized unbundling may also meet the requirements of Subsection 
(b) for its existing generation business activities in the Electric 
Reliability Council of Texas if it meets and maintains compliance 
with the following requirements:
		(1)  the electric utility has no more than 400 
megawatts of Texas jurisdictional capacity from generating units 
within the Electric Reliability Council of Texas that have not been 
mothballed or retired;
		(2)  the electric utility has a contract or contracts 
with separate nonaffiliated companies or separate affiliated 
companies for the sale of all of the output from its generating 
units that have not been mothballed or retired with a contract term 
that is no shorter than 20 years or the life of the generating 
units, whichever is shorter; and
		(3)  the electric utility has a separate division 
within the electric utility for its generation business activities.
	(c-1)  A separate division described by Subsection (c)(3) is 
subject to Subsection (d) and, for the purposes of this chapter, is 
considered a separate affiliated power generation company and a 
competitive affiliate.
	SECTION 2.  This Act takes effect September 1, 2005.