By: Fraser, West S.B. No. 896

A BILL TO BE ENTITLED

AN ACT

relating to procedures of the Public Utility Commission of Texas with regard to certain transactions.

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

SECTION 1. Section 14.101, Utilities Code, is amended to read as follows:

Sec. 14.101. REPORT OF CERTAIN TRANSACTIONS; COMMISSION CONSIDERATION. (a) Unless a public utility, holding company, or affiliate reports the transaction to the commission within a reasonable time, and the commission approves the transaction, the public utility, holding company, or affiliate may not:

(1) sell, acquire, or lease a plant as an operating unit or system in this state for a total consideration of more than $100,000; or

(2) merge or consolidate with another public utility operating in this state.

(b) Prior to the close of each transaction, and prior to the receipt of all necessary regulatory approvals, a [A] public utility, holding company, or affiliate shall report to the commission [within a reasonable time] each transaction that involves the sale of at least 50 percent of the stock of the utility, holding company, or affiliate. On the filing of a report with the commission, the commission shall investigate the transaction, with or without a public hearing, to determine whether the action is consistent with the public interest. In reaching its determination, the commission shall consider:

(1) the reasonable value of the property, facilities, or securities to be acquired, disposed of, merged, transferred, or consolidated;

(2) whether the transaction will:

(A) adversely affect the health or safety of customers or employees;

(B) result in the transfer of jobs of citizens of this state to workers domiciled outside this state; or

(C) result in the decline of service;

(3) whether the public utility, holding company, or affiliate will receive consideration equal to the reasonable value of the assets when it sells, leases, or transfers assets; and

(4) whether the transaction is consistent with the public interest.

(c) If the commission finds that a transaction is not in the public interest, the commission shall take appropriate action, which may include:

(1) disapproving the transaction; or

(2) if appropriate, taking the effect of the transaction into consideration in ratemaking proceedings and disallowing [disallow] the effect of the transaction if the transaction will unreasonably affect rates or service.

(d) This section does not apply to:

(1) the purchase of a unit of property for replacement; or

(2) an addition to the facilities of a public utility by construction[; or

[(3) transactions that facilitate unbundling, asset valuation, minimization of ownership or control of generation assets, or other purposes consistent with Chapter 39].

(e) In conducting the analysis under this section, the commission shall consider the extent to which the transaction facilitates the development of the competitive market, the extent to which the transaction mitigates market power in either the retail or wholesale electricity market, or other purposes consistent with Chapter 39.

(f) Before approving a transaction under this section, the commission shall require the public utility, holding company, or affiliate reporting the transaction to provide any and all information necessary for the commission to carry out its duties under this section, including but not limited to:

(1) identification of all costs, both short-term and long-term, of the transaction;

(2) specification of each promise, pledge, concession, or agreement made by the public utility or other entity;

(3) identification of any potential rate and service impacts that may occur as a result of the transaction; and

(4) identification of any and all benefits of the transaction.

(g) Notwithstanding Subsection (b), at the request of any party to the proceeding, the commission shall conduct a public hearing on the transaction.

(h) The commission may impose conditions that it deems necessary before granting approval of any transaction under this section.

(i) The commission shall adopt rules to enforce the requirements of this section. Such rules shall include periodic reports by the public utility, holding company, or affiliate as necessary to determine whether the public utility, holding company, or affiliate has satisfied the requirements of this section and any requirements established by the commission in any order issued under this section.

(j) On the dates specified in Section 31.003, the commission shall report to the legislature the status of any transactions approved, denied, or under review pursuant to this section and any utility, holding company, or affiliate that has failed to satisfy the requirements of any order issued under this section.

SECTION 2. Section 37.154, Utilities Code, is amended by adding Subsection (c) to read as follows:

(c) Notwithstanding Subsection (a), the commission shall not approve the sale, assignment, or lease of a certificate or a right obtained under a certificate if the commission determines that the purchaser, assignee, or lessee has debts or is capitalized in a manner that would adversely affect the rates or services of the purchaser, assignee, or lessee.

SECTION 3. 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, 2007.