81R35671 TRH-D

By: Fraser S.B. No. 1772

Substitute the following for S.B. No. 1772:

By: Solomons C.S.S.B. No. 1772

A BILL TO BE ENTITLED

AN ACT

relating to the authority of the Public Utility Commission of Texas to address market power abuse, including the right to order restitution for violations.

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

SECTION 1. Section 39.157, Utilities Code, is amended by amending Subsection (a) and adding Subsections (a-1), (j), (k), (l), (m), (n), (o), and (p) to read as follows:

(a) The commission shall monitor market power associated with the generation, transmission, distribution, and sale of electricity in this state. On a finding that market power abuses or other violations of this section have occurred or are occurring, the commission shall require reasonable mitigation of the market power by one or any combination of the following:

(1) ordering the construction of additional transmission or distribution facilities;

(2) [, by] seeking an injunction or civil penalties as necessary to eliminate or to remedy the market power abuse or violation as authorized by Chapter 15;

(3) [, by] imposing an administrative penalty as authorized by Chapter 15;

(4) ordering refunds to affected parties pursuant to Section 17.157;

(5) with regard to the wholesale market, ordering refunds to affected parties in a manner established by the commission; or

(6) [, or by] suspending, revoking, or amending a certificate or registration as authorized by Section 39.356.

(a-1) The commission shall permit the office, in exercising its powers to represent residential and small commercial consumers, to participate in enforcement proceedings to seek refunds for alleged market power abuses or manipulation of the wholesale market. Section 15.024(c) does not apply to an administrative penalty imposed under this section. For purposes of this subchapter, market power abuses are practices by persons possessing market power that are unreasonably discriminatory or tend to unreasonably restrict, impair, or reduce the level of competition, including practices that tie unregulated products or services to regulated products or services or unreasonably discriminate in the provision of regulated services. For purposes of this section, "market power abuses" include predatory pricing, withholding of production, precluding entry, and collusion. A violation of the code of conduct provided by Subsection (d) that materially impairs the ability of a person to compete in a competitive market shall be deemed to be an abuse of market power. The possession of a high market share in a market open to competition may not, of itself, be deemed to be an abuse of market power; however, this sentence shall not affect the application of state and federal antitrust laws.

(j) The commission shall contract with an entity selected by the commission to act as the commission's retail electric market monitor to:

(1) detect and prevent:

(A) possible market power abuse or market manipulation strategies; and

(B) unfair, misleading, or deceptive practices; and

(2) recommend measures to enhance the efficiency of the retail market.

(k) The commission is responsible for ensuring that the commission's retail market monitor has the resources, expertise, and authority necessary to monitor the retail electric market effectively and shall adopt rules and perform oversight of the retail market monitor as necessary. The retail market monitor shall operate under the supervision and oversight of the commission. The commission shall retain all enforcement authority conferred under this title, and this section may not be construed to confer enforcement authority on the retail market monitor or to authorize the commission to delegate the commission's enforcement authority to the retail market monitor. The commission by rule shall define:

(1) the retail market monitor's monitoring responsibilities, including reporting obligations and limitations;

(2) the standards for funding the retail market monitor, including staffing requirements;

(3) qualifications for personnel of the retail market monitor; and

(4) ethical standards for the retail market monitor and the personnel of the retail market monitor.

(l) In adopting rules governing the standards for funding the retail market monitor, the commission shall consult with a subcommittee of the governing body of the independent organization certified under Section 39.151 to receive information on how money is or should be spent for market monitoring functions. Rules governing ethical standards must include provisions designed to ensure that the personnel of the retail market monitor are professionally and financially independent from market participants. The commission shall develop and implement policies that clearly separate the policymaking responsibilities of the commission and the monitoring, analysis, and reporting responsibilities of the retail market monitor.

(m) The retail market monitor immediately shall report directly to the commission any potential market manipulations and any discovered or potential violations of commission rules or rules of the independent organization.

(n) The personnel of the retail market monitor may communicate with commission staff on any matter without restriction.

(o) The retail market monitor annually shall submit to the commission a report that identifies market design flaws and recommends methods to correct the flaws. The commission shall review the report and evaluate whether changes to rules of the commission should be made.

(p) The commission shall investigate whether a retail electric provider is abusing market power or engaging in unfair, misleading, or deceptive practices. Retail electric providers shall cooperate with the commission in any investigation and shall provide information requested. The commission may assess administrative penalties under Section 15.023 for any violation discovered under this section.

SECTION 2. The Public Utility Commission of Texas shall adopt rules to implement the changes in law made by this Act as quickly as practicable.

SECTION 3. The changes in law made by this Act apply only to a violation that occurs or continues to occur on or after the effective date of this Act. A violation that occurs before the effective date of this Act is covered by the law in effect on the date the violation occurred, and that law is continued in effect for that purpose.

SECTION 4. 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, 2009.