80R4212 JJT-F

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 generation 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 GENERATION UNIT DECOMMISSIONING COSTS. (a) In this section:

(1) "Competitive retail electric customer" means a retail electric customer in a geographic area of this state in which retail customer choice has been implemented, other than a customer of a municipally owned utility or electric cooperative that has not implemented customer choice.

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

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

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

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

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

(2) is 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. In determining the amount of the annual decommissioning funding under this subsection or Subsection (f), the commission shall consider the most current reasonably available information on the cost of decommissioning.

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

(3) 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 competitive retail electric customers, consistent with law. The competitive retail electric customers of a power generation company that owns a nuclear generating unit are responsible for funding any shortfall in the cost of decommissioning the nuclear generating unit if:

(1) the power generation company defaults on a debt obligation associated with financing the nuclear generating unit or fails to remit the annual amount of decommissioning funding in accordance with commission order and does not cure that default or failure within 90 days; or

(2) the nuclear generating unit is being decommissioned and the balance of the nuclear decommissioning trust is not sufficient to fund the cost of decommissioning.

(k) If competitive retail electric customers become responsible for the costs of decommissioning a nuclear generating unit and incur costs under Subsection (j) and the nuclear generating unit becomes operational by the power generation company described by Subsection (j)(1) or under new ownership, as a condition of operating the generating unit, the defaulting power generation company or new owner shall repay the costs the competitive retail electric customers 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).

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