2005S0529-1  03/09/05


By:  Fraser                                                       S.B. No. 1495


A BILL TO BE ENTITLED

AN ACT

relating to the securitization of the nonbypassable delivery rates 
of transmission and distribution utilities.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Subsection (c), Section 39.262, Utilities Code, 
is amended to read as follows:
	(c)  After January 10, 2004, at a schedule and under 
procedures to be determined by the commission, each transmission 
and distribution utility, its affiliated retail electric provider, 
and its affiliated power generation company shall jointly file to 
finalize stranded costs under Subsections (h) and (i) and reconcile 
those costs with the estimated stranded costs used to develop the 
competition transition charge in the proceeding held under Section 
39.201.  Any resulting difference shall be applied to the 
nonbypassable delivery rates of the transmission and distribution 
utility, except that at the utility's option, any or all of the 
amounts recovered under this section [remaining stranded costs] may 
be securitized under Subchapter G.
	SECTION 2.  Section 39.301, Utilities Code, is amended to 
read as follows:   
	Sec. 39.301.  PURPOSE.  The purpose of this subchapter is to 
enable utilities to use securitization financing to recover 
regulatory assets and all other amounts determined under Section 
39.262 and any amounts being recovered under a competition 
transition charge determined as a result of the proceedings under 
Sections 39.201 and 39.262.  It is the policy of this state to 
encourage electric utilities and transmission and distribution 
utilities to use securitization financing [stranded costs,] 
because this type of debt will lower the carrying costs of the 
assets relative to the costs that would be incurred using 
conventional utility financing methods.  The proceeds of the 
transition bonds shall be used solely for the purposes of reducing 
the amount of recoverable regulatory assets and other amounts 
[stranded costs], as determined by the commission in accordance 
with this chapter, through the refinancing or retirement of utility 
debt or equity.  The commission shall ensure that securitization 
provides tangible and quantifiable benefits to ratepayers, greater 
than would have been achieved absent the issuance of transition 
bonds.  The commission shall ensure that the structuring and 
pricing of the transition bonds result in the lowest transition 
bond charges consistent with market conditions and the terms of the 
financing order.  The amount securitized may not exceed the present 
value of the revenue requirement over the life of the proposed 
transition bond associated with the regulatory assets or stranded 
costs sought to be securitized.  The present value calculation 
shall use a discount rate equal to the proposed interest rate on the 
transition bonds.
	SECTION 3.  Subdivision (4), Section 39.302, Utilities Code, 
is amended to read as follows:
		(4)  "Qualified costs" means 100 percent of an electric 
utility's regulatory assets and 75 percent of its recoverable costs 
determined by the commission under Section 39.201 and any remaining 
amounts [stranded costs] determined under Section 39.262 together 
with the costs of issuing, supporting, and servicing transition 
bonds and any costs of retiring and refunding the electric 
utility's existing debt and equity securities in connection with 
the issuance of transition bonds.  The term includes the costs to 
the commission of acquiring professional services for the purpose 
of evaluating proposed transactions under Section 39.201 and this 
subchapter.
	SECTION 4.  Subsections (a) and (b), Section 39.303, 
Utilities Code, are amended to read as follows:
	(a)  The commission shall adopt a financing order, on 
application of a utility to recover the utility's regulatory assets 
and other amounts determined [eligible stranded costs] under 
Section 39.201 or 39.262, on making a finding that the total amount 
of revenues to be collected under the financing order is less than 
the revenue requirement that would be recovered over the remaining 
life of the stranded costs using conventional financing methods and 
that the financing order is consistent with the standards in 
Section 39.301.
	(b)  The financing order shall detail the amount of 
regulatory assets and other amounts [stranded costs] to be 
recovered and the period over which the nonbypassable transition 
charges shall be recovered, which period may not exceed 15 years.
	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.