88R11236 KBB-F

By: Troxclair H.B. No. 4212

A BILL TO BE ENTITLED

AN ACT

relating to competition in the electric utility market of certain municipalities.

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

SECTION 1. Section 40.003, Utilities Code, is amended by amending Subsection (a) and adding Subsection (g) to read as follows:

(a) Municipally owned utilities, other than utilities required to initiate customer choice under Section 40.051(d), and river authorities may adopt and use securitization provisions having the effect of the provisions provided by Subchapter G, Chapter 39, to recover through appropriate charges their stranded costs, at a recovery level deemed appropriate by the municipally owned utility or river authority up to 100 percent, under rules and procedures that shall be established:

(1) in the case of a municipally owned utility to which this subsection applies, by the municipal governing body or a body vested with the power to manage and operate the municipally owned utility, including procedures providing for rate orders of the governing body having the effect of financing orders, providing for a separate nonbypassable charge approved by the governing body, in the nature of a transition charge, to be collected from all retail electric customers of the municipally owned utility, identified as of a date determined by the governing body, to fund the recovery of the stranded costs of the municipally owned utility and of all reasonable related expenses, as determined by the governing body, and providing for the issuance of bonds, having a term and other characteristics as determined by the governing body, as necessary to recover the amount deemed appropriate by the governing body through securitization financing; and

(2) in the case of a river authority, by the commission.

(g) A municipally owned utility required to initiate customer choice under Section 40.051(d) may recover the utility's stranded cost through securitization provisions:

(1) having the effect of the provisions provided by Subchapter G, Chapter 39; and

(2) under rules and procedures established by the commission.

SECTION 2. Section 40.051, Utilities Code, is amended by amending Subsection (a) and adding Subsection (d) to read as follows:

(a) Except as provided by Subsection (d), the [The] municipal governing body or a body vested with the power to manage and operate a municipally owned utility has the discretion to decide when or if the municipally owned utility will provide customer choice.

(d) Not later than the 365th day after the date a municipal governing body or other body described by Subsection (a) receives notice under Section 2165.059, Government Code, that the utility is included on the list created under that section, the utility shall:

(1) initiate customer choice; and

(2) except as otherwise provided by this chapter, be considered to be a municipally owned utility that chooses to participate in customer choice under Subsection (b) for purposes of this subtitle.

SECTION 3. Section 40.054, Utilities Code, is amended by amending Subsection (e) and adding Subsection (g) to read as follows:

(e) The commission does not have jurisdiction to require unbundling of services or functions of[, or to regulate the recovery of stranded investment of,] a municipally owned utility or, except as provided by this section, jurisdiction with respect to the rates, terms, and conditions of service for retail customers of a municipally owned utility within the utility's certificated service area.

(g) Except as provided by Section 40.003(g), the commission does not have jurisdiction to regulate the recovery of stranded investment of a municipally owned utility.

SECTION 4. Section 40.055, Utilities Code, is amended by amending Subsection (a) and adding Subsection (c) to read as follows:

(a) The municipal governing body or a body vested with the power to manage and operate a municipally owned utility has exclusive jurisdiction to:

(1) set all terms of access, conditions, and rates applicable to services provided by the municipally owned utility, subject to Sections 40.054 and 40.056, including nondiscriminatory and comparable rates for distribution, but excluding wholesale transmission rates, terms of access, and conditions for wholesale transmission service set by the commission under this subtitle, provided that the rates for distribution access established by the municipal governing body shall be comparable to the distribution access rates that apply to the municipally owned utility and the municipally owned utility's affiliates;

(2) determine whether to unbundle any energy-related activities and, if the municipally owned utility chooses to unbundle, whether to do so structurally or functionally;

(3) except for a municipally owned utility required to initiate customer choice under Section 40.051(d), reasonably determine the amount of the municipally owned utility's stranded investment;

(4) except for a municipally owned utility required to initiate customer choice under Section 40.051(d), establish nondiscriminatory transition charges reasonably designed to recover the stranded investment over an appropriate period of time, provided that recovery of retail stranded costs shall be from all existing or future retail customers, including the facilities, premises, and loads of those retail customers, within the utility's geographical certificated service area as it existed on May 1, 1999;

(5) determine the extent to which the municipally owned utility will provide various customer services at the distribution level, including other services that the municipally owned utility is legally authorized to provide, or will accept the services from other providers;

(6) manage and operate the municipality's electric utility systems, including exercise of control over resource acquisition and any related expansion programs;

(7) establish and enforce service quality and reliability standards and consumer safeguards designed to protect retail electric customers, including safeguards that will accomplish the objectives of Sections 39.101(a) and (b), consistent with this chapter;

(8) determine whether a base rate reduction is appropriate for the municipally owned utility;

(9) determine any other utility matters that the municipal governing body or body vested with power to manage and operate the municipally owned utility believes should be included;

(10) make any other decisions affecting the municipally owned utility's participation in customer choice that are not inconsistent with this chapter; and

(11) determine the extent to which the municipally owned utility offers energy efficiency programs and how the programs are administered by the utility, except as provided by Section 39.9051(e).

(c) For a municipally owned utility required to initiate customer choice under Section 40.051(d), the relevant date for the commission to identify stranded investment is the date the municipal governing body or other body receives notice under Section 2165.059, Government Code, that the utility is included on the list created under that section.

SECTION 5. Subchapter B, Chapter 40, Utilities Code, is amended by adding Section 40.061 to read as follows:

Sec. 40.061. ENFORCEMENT OF CUSTOMER CHOICE. (a) In this section, "governing body" means the body vested with the power to manage and operate a municipally owned utility.

(b) If the commission determines that a municipally owned utility required to initiate customer choice under Section 40.051(d) is not adequately offering customer choice on the 90th day after the date customer choice was to be initiated, the utility becomes subject to the oversight authority of the commission for matters relating to the implementation of customer choice.

(c) The commission shall make a determination under Subsection (b), if any, as soon as practicable after the expiration of the 90-day period. The commission assumes oversight authority over the municipally owned utility on the date the commission makes an affirmative determination that the utility is not adequately offering customer choice, and this authority encompasses any portion of the authority vested with the governing body of the utility under this subchapter that the commission determines is necessary.

(d) The governing body shall work cooperatively with the commission in offering customer choice.

(e) The oversight authority under this section continues until the date the commission determines that the municipally owned utility:

(1) has completed the transition to customer choice; and

(2) is prepared to continue to provide customer choice in a manner consistent with the competitive market.

(f) On the date the commission makes an affirmative determination under Subsection (e), the management and operation of the municipally owned utility returns to the control of the utility's governing body.

SECTION 6. Subchapter B, Chapter 2165, Government Code, is amended by adding Section 2165.059 to read as follows:

Sec. 2165.059. LIST BASED ON CERTAIN STATE-OWNED OFFICE SPACE. (a) On the second Monday in September of each year, the commission shall:

(1) create a list of each municipally owned utility in whose certificated retail service area the commission manages three million or more square feet of state-owned office space; and

(2) for each utility that appears on the list for the first time, notify the Public Utility Commission of Texas and the governing body vested with the power to manage and operate the utility of the utility's addition to the list.

(b) The Public Utility Commission of Texas shall assist the commission as necessary in performing duties under Subsection (a).

SECTION 7. (a) The changes in law made by this Act apply only to the activities of a municipally owned utility that occur on or after the effective date of this Act. Activities of a municipally owned utility that occur before the effective date of this Act are governed by the law in effect on the date the activities occurred, and the former law is continued in effect for that purpose.

(b) The Texas Facilities Commission shall create the initial list described by Section 2165.059, Government Code, as added by this Act, on September 11, 2023.

SECTION 8. 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.