88R3204 JXC-F
 
  By: Metcalf 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 and cyber 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)  undergrounding certain electrical distribution
  lines; 
               (3)  lightning mitigation measures;
               (4)  flood mitigation measures;
               (5)  information technology and cyber security
  measures;
               (6)  vegetation management; or
               (7)  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)  Not later than the 180th day after an electric utility
  files a plan under Subsection (b) that complies with any applicable
  commission rules, the commission shall by order approve, approve
  with modification, or deny the plan.  The commission may not approve
  a plan if the commission determines that approving the plan is not
  in the public interest.  If the commission does not issue an order
  by the 180th day, the plan and any associated rider described by
  Subsection (i) are considered to have been approved.
         (f)  If the commission denies the plan, the denial 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 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,
  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.  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 at the time the plan is first
  implemented.
         (j)  As part of a review described by Subsection (g), the
  commission shall reconcile the rider 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 costs relating to the
  implementation of the plan for future recovery as a regulatory
  asset, including 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 35.004,
  36.209, and 36.210 or another general rate proceeding.
         (l)  Plan costs considered by the commission to be reasonable
  and prudent may not include costs recovered through the electric
  utility's base rates 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.
         (m)  An electric utility for which the commission has
  approved a plan under this section is not required to submit to the
  commission during the period in which the plan is in effect any
  annual report required by Section 38.005 or 38.101 or by commission
  rule adopted under those sections.  This subsection does not apply
  to an annual service quality report required by commission rule.
         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.