By: Metcalf, Raymond, et al. H.B. No. 2555
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to transmission and distribution system resiliency
  planning by and cost recovery for electric utilities.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  The legislature finds that:
               (1)  extreme weather conditions, including high winds,
  lightning, flooding, and freezes, can cause extraordinary damage to
  electrical transmission and distribution facilities, resulting in
  power outages;
               (2)  it is in the state's interest to promote the use of
  resiliency measures to enable electrical transmission and
  distribution infrastructure to withstand extreme weather
  conditions, including hardening electrical transmission and
  distribution facilities, undergrounding certain electrical
  distribution lines, lightning mitigation measures, flood
  mitigation measures, information technology, cybersecurity
  measures, physical security measures, vegetation management, and
  wildfire mitigation and response;
               (3)  protecting electrical transmission and
  distribution infrastructure from extreme weather conditions can
  effectively reduce system restoration costs to and outage times for
  customers and improve system resiliency and overall service
  reliability for customers;
               (4)  it is in the state's interest for each electric
  utility to seek to mitigate system restoration costs to and outage
  times for customers when developing plans to enhance electrical
  transmission and distribution infrastructure storm resiliency; and
               (5)  all customers benefit from reduced system
  restoration costs.
         SECTION 2.  Subchapter D, Chapter 38, Utilities Code, is
  amended by adding Section 38.078 to read as follows:
         Sec. 38.078.  TRANSMISSION AND DISTRIBUTION SYSTEM
  RESILIENCY PLAN AND COST RECOVERY. (a)  In this section, "plan"
  means a transmission and distribution system resiliency plan
  described by Subsection (b).
         (b)  An electric utility may file, in a manner authorized by
  commission rule, a plan to enhance the resiliency of the utility's
  transmission and distribution system through at least one of the
  following methods:
               (1)  hardening electrical transmission and
  distribution facilities;
               (2)  modernizing electrical transmission and
  distribution facilities;
               (3)  undergrounding certain electrical distribution
  lines;
               (4)  lightning mitigation measures;
               (5)  flood mitigation measures;
               (6)  information technology;
               (7)  cybersecurity measures;
               (8)  physical security measures;
               (9)  vegetation management; or
               (10)  wildfire mitigation and response.
         (c)  A plan must explain the systematic approach the electric
  utility will use to carry out the plan during at least a three-year
  period.
         (d)  In determining whether to approve a plan filed under
  this section, the commission shall consider:
               (1)  the extent to which the plan is expected to enhance
  system resiliency, including whether the plan prioritizes areas of
  lower performance; and
               (2)  the estimated costs of implementing the measures
  proposed in the plan.
         (e)  The commission shall issue an order to approve, modify,
  or deny a plan filed under Subsection (b) and any associated rider
  described by Subsection (i) not later than the 180th day after the
  plan is filed with the commission. The commission may not approve a
  plan if the commission determines that approving the plan is not in
  the public interest.
         (f)  For a plan approved by the commission, with or without
  modification, an electric utility may request a good cause
  exception on implementing all or some of the measures or incurring
  all or some of the estimated costs in the plan if operational needs,
  business needs, financial conditions, or supply chain or labor
  conditions dictate the exception. The commission's denial of a
  plan is not considered to be a finding of the prudence or imprudence
  of a measure or cost in the plan for the purposes of Chapter 36 or
  this chapter.
         (g)  An electric utility for which the commission has
  approved a plan under this section may request that the commission
  review an updated plan submitted by the electric utility.  The
  updated plan must comply with any applicable commission rules and
  take effect on a date that is not earlier than the third anniversary
  of the approval date of the utility's most recently approved plan.  
  The commission shall review and approve, modify, or deny the
  updated plan in the manner provided by Subsections (d), (e), and
  (f).
         (h)  An electric utility's implementation of a plan approved
  under this section may not be considered imprudent for the purposes
  of Chapter 36 or this chapter.  If the commission determines that
  the costs to implement an approved plan were prudently incurred and
  otherwise reasonable, those costs are not subject to disallowance
  for exceeding the estimates in the plan.
         (i)  Notwithstanding any other law, an electric utility may
  file with a plan an application for a rider to recover all or a
  portion of the estimated costs relating to the electric utility's
  implementation of the plan, other than transmission-related costs.
  If the commission approves the plan, the commission shall determine
  the appropriate terms of the rider in the approval order. A rider
  approved under this subsection must allow the electric utility to
  begin recovering the levelized cost of implementing the approved
  plan, other than transmission-related costs, at the time the plan
  is first implemented. The commission shall adopt a procedure for
  reconciliation of an electric utility's distribution-related
  expenses to implement an approved plan.
         (j)  As part of a review described by Subsection (g), the
  commission shall reconcile the rider authorized under Subsection
  (i) to determine the electric utility's reasonably and prudently
  incurred plan costs.
         (k)  If an electric utility that files a plan with the
  commission does not apply for a rider under Subsection (i), the
  utility may defer all or a portion of the distribution-related
  costs relating to the implementation of the plan for future
  recovery as a regulatory asset, including depreciation expense and
  carrying costs at the utility's weighted average cost of capital
  established in the commission's final order in the utility's most
  recent base rate proceeding, and use commission authorized cost
  recovery alternatives under Sections 36.209 and 36.210 or another
  general rate proceeding.
         (l)  Plan costs considered by the commission to be reasonable
  and prudent may include only incremental costs that are not already
  being recovered through the electric utility's base rates or any
  other rate rider and must be allocated to customer classes pursuant
  to the rate design most recently approved by the commission.  If a
  capital investment is recoverable as a plan cost, the electric
  utility may recover all reasonable and prudent costs associated
  with the investment, including the annual depreciation expense
  related to the investment calculated at the utility's currently
  approved depreciation rates, the after-tax return on the
  undepreciated balance of the investment calculated using the rate
  of return approved by the commission in the utility's last
  comprehensive base rate proceeding, and federal income tax and
  other taxes related to the investment.
         SECTION 3.  The Public Utility Commission of Texas shall
  adopt rules to implement Section 38.078, Utilities Code, as added
  by this Act, not later than the 180th day after the effective date
  of this Act.
         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, 2023.