80R3198 TAD-D

By: Turner H.B. No. 553

A BILL TO BE ENTITLED

AN ACT

relating to market power abuse in the wholesale electricity market and pricing safeguards in certain markets; providing administrative and criminal penalties.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Sections 15.023(b) and (d), Utilities Code, are amended to read as follows:

(b) The penalty for a violation, except for a violation under Section 39.157, may be in an amount not to exceed $25,000. Each day a violation continues or occurs is a separate violation for purposes of imposing a penalty. The penalty for a violation under Section 39.157 may be in an amount not to exceed $250,000.

(d) Except for a finding of a violation under Section 39.157, the [The] classification system established under Subsection (c) shall provide that a penalty in an amount that exceeds $5,000 may be assessed only if the violation is included in the highest class of violations in the classification system.

SECTION 2. Section 39.157, Utilities Code, is amended by amending Subsection (a) and adding Subsection (a-1) to read as follows:

(a) The commission shall monitor market power associated with the generation, transmission, distribution, and sale of electricity in this state. The commission shall initiate an investigation if the commission receives notice that market abuses or other violations of this section are allegedly occurring or have allegedly occurred. On the initiation of an investigation of potential market abuse or a potential violation of this section, the commission shall make available to the public the name of each person that is a subject of the investigation unless the disclosure of a name could significantly impede or jeopardize the investigation. If the commission does not disclose the name of a person on the initiation of the investigation, the commission shall disclose the name not later than the date the commission concludes the investigation. Not later than the 60th day after learning of a potential violation under this section, the commission shall conclude the investigation and make a finding of whether a violation has occurred. On a finding that market power abuses or other violations of this section are occurring or have occurred, the commission shall require reasonable mitigation of the market power by ordering the construction of additional transmission or distribution facilities, by seeking an injunction or civil penalties as necessary to eliminate or to remedy the market power abuse or violation as authorized by Chapter 15, by imposing an administrative penalty as authorized by Chapter 15, [or] by suspending, revoking, or amending a certificate or registration as authorized by Section 39.356, or by ordering a person to make restitution as provided by Subsection (a-1) to each person financially damaged by a person as a result of a violation of this section. Section 15.024(c) does not apply to an administrative penalty imposed under this section. The commission shall make public the penalty imposed by the commission on a person under this section, including any agreement entered into between the commission and a person regarding the imposition of a penalty. For purposes of this subchapter, market power abuses are practices by persons possessing market power that are unreasonably discriminatory or tend to unreasonably restrict, impair, or reduce the level of competition, including practices that tie unregulated products or services to regulated products or services or unreasonably discriminate in the provision of regulated services. For purposes of this section, "market power abuses" include predatory pricing, withholding of production, precluding entry, and collusion. A violation of the code of conduct provided by Subsection (d) that materially impairs the ability of a person to compete in a competitive market shall be deemed to be an abuse of market power. The possession of a high market share in a market open to competition may not, of itself, be deemed to be an abuse of market power; however, this sentence shall not affect the application of state and federal antitrust laws.

(a-1) If the commission orders a person to make restitution for a violation under this section, the total amount of restitution ordered may not exceed the actual amount of the economic benefit gained by a person as a result of a violation. If an administrative penalty under Section 15.023 is assessed in addition to restitution, the total amount of restitution ordered under this section may not exceed the difference between the administrative penalty and the actual amount of the economic benefit gained by a person as a result of a violation. The commission by rule shall adopt procedures for determining the amount of economic benefit gained by a person and the persons entitled to restitution as a result of a violation under this section.

SECTION 3. Subchapter D, Chapter 39, Utilities Code, is amended by adding Sections 39.159, 39.160, and 39.161 to read as follows:

Sec. 39.159. CRIMINAL PENALTY. (a) A person who knowingly violates Section 39.157 or a rule adopted or order issued by the commission under that section commits an offense.

(b) An offense under this section is a felony of the second degree.

Sec. 39.160. MAXIMUM SUPPLY OFFER IN MARKETS OPERATED BY ERCOT. A supply offer in a market operated by ERCOT may not exceed $1,000/MWh or $1,000/MW/h.

Sec. 39.161. BIDDING IN ERCOT. The commission by rule shall adopt methods and procedures for preventing inappropriate bidding and other forms of gaming within the ERCOT power region, including the bidding method commonly known as "hockey-stick" bidding.

SECTION 4. (a) The change in law made by this Act applies only to a violation committed on or after September 1, 2007. For purposes of this section, a violation is committed before September 1, 2007, if any element of the violation occurs before that date.

(b) A violation committed before September 1, 2007, is covered by the law in effect when the violation was committed, and the former law is continued in effect for that purpose.

SECTION 5. An offense committed before September 1, 2007, is covered by the law in effect when the offense was committed, and the former law is continued in effect for that purpose. For purposes of this section, an offense was committed before September 1, 2007, if any element of the offense was committed before that date.

SECTION 6. This Act takes effect September 1, 2007.