S.B. No. 1668
AN ACT
relating to affiliates of public utilities and regulation of
electric utilities with regard to payments to affiliates and
unbundling requirements.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 36.058, Utilities Code, is amended by
amending Subsection (c) and adding Subsection (f) to read as
follows:
(c) A finding under Subsection (b) must include:
(1) a specific finding of the reasonableness and
necessity of each item or class of items allowed; and
(2) a finding that the price to the electric utility is
not higher than the prices charged by the supplying affiliate [to
its other affiliates or divisions or to a nonaffiliated person] for
the same item or class of items to:
(A) its other affiliates or divisions; or
(B) a nonaffiliated person within the same market
area or having the same market conditions.
(f) If the regulatory authority finds that an affiliate
expense for the test period is unreasonable, the regulatory
authority shall:
(1) determine the reasonable level of the expense; and
(2) include that expense in determining the electric
utility's cost of service.
SECTION 2. Chapter 11, Utilities Code, is amended by adding
Section 11.0042 to read as follows:
Sec. 11.0042. DEFINITION OF AFFILIATE. (a) The term
"person" or "corporation" as used in the definition of "affiliate"
provided by Section 11.003(2) does not include:
(1) a broker or dealer registered under the Securities
Exchange Act of 1934 (15 U.S.C. Section 78a et seq.), as amended;
(2) a bank or insurance company as defined under the
Securities Exchange Act of 1934 (15 U.S.C. Section 78a et seq.), as
amended;
(3) an investment adviser registered under state law
or the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-1 et
seq.); or
(4) an investment company registered under the
Investment Company Act of 1940 (15 U.S.C. Section 80a-1 et seq.); or
(5) an employee benefit plan, pension fund, endowment
fund, or other similar entity that may, directly or indirectly,
own, hold, or control five percent or more of the voting securities
of a public utility or the parent corporation of a public utility if
the entity did not acquire the voting securities:
(A) for the purpose of or with the effect of
changing or influencing the control of the issuer of the
securities; or
(B) in connection with or as a participant in any
transaction that changes or influences the control of the issuer of
the securities.
(b) For the purpose of determining whether a person is an
affiliate under Section 11.006(a)(3), the term "person" does not
include an entity that may, directly or indirectly, own, hold, or
control the voting securities of a public utility or the parent
corporation of a public utility if the entity did not acquire the
voting securities:
(1) for the purpose of or with the effect of changing
or influencing the control of the issuer of the securities; or
(2) in connection with or as a participant in any
transaction that changes or influences the control of the issuer of
the securities.
(c) A report filed by an entity described by Subsection
(a)(5) or (b) with the Securities and Exchange Commission is
conclusive evidence of the entity's intent if the report confirms
that the voting securities were not acquired:
(1) for the purpose of or with the effect of changing
or influencing the control of the issuer of the securities; or
(2) in connection with or as a participant in any
transaction that changes or influences the control of the issuer of
the securities.
SECTION 3. 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 does not have stranded costs
described by Section 39.254 and that on September 1, 2005, has not
finalized unbundling pursuant to a commission order approving an
unbundling plan may also meet the requirements of Subsection (b)
for generation facilities existing on September 1, 2005, 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 4. 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.
______________________________ ______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 1668 passed the Senate on
April 21, 2005, by the following vote: Yeas 31, Nays 0; and that
the Senate concurred in House amendments on May 28, 2005, by the
following vote: Yeas 31, Nays 0.
______________________________
Secretary of the Senate
I hereby certify that S.B. No. 1668 passed the House, with
amendments, on May 25, 2005, by the following vote: Yeas 145,
Nays 0, two present not voting.
______________________________
Chief Clerk of the House
Approved:
______________________________
Date
______________________________
Governor