By: Fraser, Jackson S.B. No. 1495
(In the Senate - Filed March 10, 2005; March 21, 2005, read
first time and referred to Committee on Business and Commerce;
April 6, 2005, reported favorably by the following vote: Yeas 9,
Nays 0; April 6, 2005, sent to printer.)
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.
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