Honorable Brian Birdwell, Chair, Senate Committee on Natural Resources & Economic Development
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
HB2263 by Darby (Relating to the authority of a natural gas local distribution company to offer energy conservation programs.), As Engrossed
Estimated Two-year Net Impact to General Revenue Related Funds for HB2263, As Engrossed : a negative impact of ($723,628) through the biennium ending August 31, 2025.
The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
General Revenue-Related Funds, Five- Year Impact:
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2024
($361,814)
2025
($361,814)
2026
($361,814)
2027
($361,814)
2028
($361,814)
All Funds, Five-Year Impact:
Fiscal Year
Probable (Cost) from General Revenue Fund 1
Change in Number of State Employees from FY 2023
2024
($361,814)
3.0
2025
($361,814)
3.0
2026
($361,814)
3.0
2027
($361,814)
3.0
2028
($361,814)
3.0
Fiscal Analysis
The bill would grant Railroad Commission (RRC) exclusive jurisdiction over energy conservation programs established by local distribution companies (LDCs). The bill would require a LDC recovering costs of an energy conservation program to apply to the RRC every three years for review and approval of the program. The bill would require RRC to permit LDCs to recover costs incurred from implementing energy conservation programs and, as applicable, amounts equal to the reduction in marginal revenues due to lower sales or demand resulting from these programs if the LDCs submit an application to the RRC for review and approval which contains certain information. The bill would allow the RRC to determine cost recovery mechanisms for these costs and to ensure that these costs are allocated to the appropriate customer classes.
The bill would direct the RRC to require annual reports containing certain information to be submitted to the RRC by local distribution companies which implement energy conservation programs under this subchapter.
The bill would require participating local distribution companies to reimburse the RRC for their proportionate share of the agency's costs related to reviewing and approving or denying cost recovery applications.
Methodology
Based on information provided by the Railroad Commission (RRC), this analysis assumes the cost for implementing the provisions of this bill would include $361,814 and 3.0 FTEs each fiscal year. According to the RRC, the first would be an Accountant VII which would consider and design cost recovery mechanisms and rulemaking, review applications from local distribution companies, and review the submitted annual energy conservation program reports. The second would be an Auditor IV which would verify compliance with the cost recovery mechanism described in the Commission's rulemaking. The final FTE would be an Administrative Law Judge II which would examine and recommend approval or denial of cost recovery applications filed pursuant to this subchapter that are referred to the agency's Hearings Division. Estimated salary, benefit, and payroll contribution expenses for these three positions would total $316,814 each fiscal year. Operating expenses would total $45,000 each fiscal year.
The fiscal implications of local distribution companies reimbursing the RRC cannot be determined because the timing and amounts of the proportionate share for each participating company that would reimburse RRC to mitigate program costs is unknown.
Technology
Railroad Commission does not anticipate additional technology needs resulting from the implementation of this bill.
Local Government Impact
No significant fiscal implication to units of local government is anticipated.