By: King of Parker H.B. No. 1386

A BILL TO BE ENTITLED

AN ACT

relating to regulation of the decommissioning costs of certain nuclear-powered commercial electric generating units.

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

SECTION 1. Subchapter E, Chapter 39, Utilities Code, is amended by adding Section 39.206 to read as follows:

Sec. 39.206. NUCLEAR-POWERED ELECTRIC GENERATING UNIT DECOMMISSIONING COSTS. (a) In this section:

(1) "Decommissioning" includes decommissioning and decontamination of a nuclear generating unit consistent with federal Nuclear Regulatory Commission requirements.

(2) "Nuclear decommissioning trust" means an external and irrevocable trust created for the purpose of funding decommissioning obligations for a nuclear generating unit.

(3) "Nuclear generating unit" means an electric generating facility that uses nuclear energy to generate power for sale.

(4) "Retail electric customer" means a retail electric customer:

(A) in a geographic area of this state in which retail customer choice has been implemented; or

(B) of a municipally owned utility or electric cooperative that has an agreement to purchase power from a nuclear generating unit.

(b) This section applies only to a nuclear generating unit that is:

(1) constructed in this state after January 1, 2002; and

(2) owned by a power generation company.

(c) A power generation company that owns a nuclear generating unit shall fund out of operating revenues on an annual basis:

(1) the costs associated with funding the decommissioning obligations for the nuclear generating unit; or

(2) the power generation company's portion of the decommissioning costs for the nuclear generating unit in proportion to the company's ownership interest in the nuclear generating unit if the unit is owned by more than one person.

(d) The power generation company shall establish a nuclear decommissioning trust for a nuclear generating unit it owns or for the proportionate share of a nuclear generating unit of which it owns a part. The funding obligations for the trust must begin before the nuclear generating unit receives its initial fuel load and begins commercial operation to generate power for sale. The terms of the trust must be consistent with trust terms and conditions the federal Nuclear Regulatory Commission requires for providing financial assurance for decommissioning.

(e) The commission by order shall establish for a nuclear generating unit the amount of annual decommissioning funding necessary to meet the decommissioning obligations for the nuclear generating unit over the unit's operating license period as established by the federal Nuclear Regulatory Commission. The power generation company shall conduct a study of the costs of decommissioning to establish the decommissioning obligations before the nuclear generating unit begins commercial operation to generate power for sale. The power generation company shall conduct the study at least once in each three-year period during the term of the nuclear generating unit's operating license using the most current reasonably available information on the costs of decommissioning. At least once in each three-year period, the commission shall conduct a proceeding to review the most recent study for each power generation company, consider other reasonably available current information on the costs of decommissioning, and determine whether the study's conclusions are reasonable.

(f) The power generation company annually shall file a report on the status of the decommissioning trust fund. At least once in each three-year period, the commission shall conduct a proceeding to review the balance of each nuclear decommissioning trust and the projected amount of annual decommissioning funding for the associated nuclear generating unit. On the conclusion of the review proceeding, the commission by order shall revise the amount of annual funding for the nuclear generating unit as necessary.

(g) A power generation company that owns all or part of a nuclear generating unit shall remit the appropriate amount of annual decommissioning funding to the nuclear decommissioning trust created for its proportionate ownership position in a nuclear generating unit in accordance with the commission's funding order issued under Subsection (e) or (f). The commission may terminate the power generation company's registration to operate if the company violates this subsection.

(h) A power generation company that owns a nuclear generating unit is the funds administrator of the nuclear decommissioning trust for the associated nuclear generating unit. The company as funds administrator shall invest the trust funds in accordance with guidelines established by commission rule and consistent with the federal Nuclear Regulatory Commission guidelines so that the decommissioning funds, plus the amounts earned from investment of the funds, will be available at the time of decommissioning. The commission shall adopt rules to define the company's specific duties as funds administrator and requirements regarding prudent management and investment of nuclear decommissioning trust funds.

(i) The commission shall adopt rules necessary to ensure that:

(1) sufficient funds are remitted to a nuclear decommissioning trust on an annual basis to cover the cost of decommissioning a nuclear generating unit at the end of its operating license period in accordance with applicable state and federal laws and regulations;

(2) the periodic cost studies and reviews described by Subsections (e) and (f) include all current reasonably available information the commission determines is necessary and appropriate;

(3) all funds remitted to a nuclear decommissioning trust are prudently managed and spent for their intended purpose; and

(4) the funds remitted to a nuclear decommissioning trust and the amounts earned from investing the funds, will be available for, and restricted to the purpose of decommissioning of the associated nuclear generating unit, including if the trust or nuclear generating unit is transferred to another person.

(j) The commission shall determine the manner in which any shortfall in the actual cost of decommissioning a nuclear generating unit shall be recovered from retail electric customers in this state, consistent with law. Subject to Subsection (k), the retail electric customers in this state are responsible for funding any shortfall in the cost of decommissioning the nuclear generating unit if:

(1) the nuclear generating unit is being decommissioned and the balance of the nuclear decommissioning trust is not sufficient to fund the cost of decommissioning; or

(2) the power generation company does not remit the required amount of funding and the company's registration to operate is terminated under Subsection (g).

(k) For retail electric customers of a municipally owned utility or an electric cooperative that has an agreement to purchase power from a nuclear generating unit, the amount of the shortfall in the cost of decommissioning the nuclear generating unit that the customers are responsible for is limited to a portion of that shortfall that bears the same proportion to the total shortfall as the amount of electric power generated by the nuclear generating unit and purchased by the municipally owned utility or electric cooperative bears to the total amount of power the nuclear generating unit generated.

(l) If retail electric customers in this state become responsible for the costs of decommissioning a nuclear generating unit and incur costs under Subsection (j) or (k) and the nuclear generating unit is recommissioned by the power generation company whose registration to operate was terminated under Subsection (g) or by a new owner, as a condition of operating the generating unit, the power generation company or new owner shall repay the costs the retail electric customers in this state incurred in the manner determined by the commission. The commission may authorize the repayment to occur over a period established by the commission if the nuclear decommissioning trust is adequately funded on an annual basis as determined by the commission in Subsection (e) or (f).

(m) The commission by rule may ensure that:

(1) money for decommissioning a nuclear generating unit is prudently collected, managed, and spent for its intended purposes; and

(2) decommissioning money that remains unspent after decommissioning of the nuclear generating unit is complete is returned to the appropriate retail electric customers.

SECTION 2. This Act takes effect September 1, 2007.