80R3931 CBH-F
 
  By: Fraser S.B. No. 216
 
 
 
   
 
 
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.  Section 39.262(c), 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, 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. This [and 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 other amounts [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.  Section 39.302(4), 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.  Sections 39.303(a) and (b), 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. If
an amount determined under Section 39.262 is subject to judicial
review at the time of the securitization proceeding, the financing
order shall include an adjustment mechanism requiring the utility
to adjust its rates, other than transition charges, or provide
credits, other than credits to transition charges, in a manner that
would refund over the remaining life of the transition bonds any
overpayments resulting from securitization of amounts in excess of
the amount resulting from a final determination after completion of
all appellate reviews. The adjustment mechanism may not affect the
stream of revenue available to service the transition bonds. An
adjustment may not be made under this subsection until all
appellate reviews, including, if applicable, appellate reviews
following a commission decision on remand of its original orders,
have been completed.
       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 August 27, 2007.