By: Fraser S.B. No. 1547

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) "Electric customer" means all retail electric customers in this state.

(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, consistent with federal Nuclear Regulatory Commission requirements.

(4) "Nuclear generating unit" means an electric generating facility that uses nuclear energy to generate electricity for sale and is permitted by the Nuclear Regulatory Commission.

(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.

(3) The obligation to fund a nuclear decommissioning trust fund is not dischargeable in bankruptcy.

(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 generating company shall perform a study on the cost of decommissioning to establish the decommissioning obligations before the nuclear generating unit begins commercial operation to generate power for sale. The study shall be performed by the power generating company at least once in each three year period during the unit's operating license period using the most current reasonably available information on the cost of decommissioning. The commission shall conduct a proceeding at least once in each three-year period to review the study and other current reasonably available information on the cost of decommissioning and determine the reasonableness of the study.

(f) The power generating company shall file an annual report to provide the status of the decommissioning trust fund and to update the commission as to its financial condition and ability to fund the decommissioning trust fund. In determining the amount of the annual decommissioning funding under this subsection, 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 as well as the financial condition of the power generating company. 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 and in order to ensure that the nuclear decommissioning trust fund is adequately funded.

(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 shall take any and all appropriate actions to ensure proper funding of the nuclear decommissioning trust, including possibly terminating 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 in Subsections (e) and (f) include all current reasonably available information as determined necessary and appropriate by the commission;

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

(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) Electric Customer Recourse.

(1) This Subsection does not apply to a power generation company that elects not be subject to this Subsection.

(2) In addition to the information required under Subsection (f), a power generation company that elects to be subject to this Subsection shall file annually a complete accounting of its operating costs and revenues and any other information the commission deems necessary in order to minimize the potential for electric customers to have to fund nuclear decommissioning under this subsection.

(3) The commission shall consider the information filed under subsection (j)(2) in determining the amount of funding to be provided annually by the power generation company, which shall be calculated to ensure that the nuclear decommissioning trust fund is funded in the most expedient manner and that electric customers have the least potential to have to fund nuclear decommissioning under this subsection.

(4) The commission shall determine the manner in which any shortfall in the actual cost of decommissioning a nuclear generating unit shall be recovered from a power generation company subject to this Subsection and electric customers. For power generation companies that elect to be subject to this section, to the extent that no recourse exists to the power generation company subject to this subsection, or its parent or affiliates, electric customers may be responsible for funding any shortfall in the cost of decommissioning the nuclear generating unit if 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 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 power generation company or new owner shall repay the costs the 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.

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