By: Fraser S.B. No. 1772

(In the Senate - Filed March 11, 2009; March 20, 2009, read first time and referred to Committee on Business and Commerce; April 24, 2009, reported adversely, with favorable Committee Substitute by the following vote: Yeas 7, Nays 0; April 24, 2009, sent to printer.)

COMMITTEE SUBSTITUTE FOR S.B. No. 1772 By: Fraser

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) and (a-2) 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 are occurring, the commission shall require reasonable mitigation of the market power by ordering the construction of additional transmission or distribution facilities, 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, by ordering a person to cease a practice that the commission finds is a market power abuse, by imposing an administrative penalty as authorized by Chapter 15, or by suspending, revoking, or amending a certificate or registration as authorized by Section 39.356. Section 15.024(c) does not apply to an administrative penalty imposed under this section. In lieu of assessing an administrative penalty as authorized by Section 15.024 and this section, the commission may order any person found to have committed market power abuse to refund to entities directly affected by the abuse an amount not to exceed the greater of the administrative penalty that would otherwise be ordered by the commission or one hundred and fifteen percent of the amount of additional profit that the person received as a result of the market power abuse. 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.

(a-1) The office shall be permitted to intervene in any proceeding concerning market power abuse or market manipulation. The commission may allow intervention to any party that demonstrates that the party has been directly affected by market power abuse, if the commission finds that participation by the party will not unduly delay the proceeding or prejudice the rights of the party accused of market power abuse. The commission may limit the scope of intervention of a party other than the office, including limits on discovery and the number of interrogatories that the party may issue on the person accused of market power abuse and commission staff. The commission shall take all necessary steps to ensure that trade secrets, proprietary information and business strategies, and any other competitively sensitive information is adequately protected from disclosure to competitors or customers of the person accused of market power abuse.

(a-2) Following a proceeding related to market power abuse in which the commission determines that refunds are appropriate, the commission shall conduct a proceeding to determine the proper method of distributing the refunds to entities directly affected by the market power abuse. Any entity directly affected by the abuse may intervene in the proceeding.

SECTION 2. 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 occurred before the effective date of this Act is covered by the law in effect at the time the violation occurred, and the former law is continued in effect for that purpose.

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, 2009.

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