Texas 2009 - 81st Regular

Texas House Bill HB1378 Compare Versions

The same version is selected twice. Please select two different versions to compare.

Version 1 (Old)

Version 2 (New)

Old	New	Differences
1	1	81R4196 JJT-F
2	2	By: Thompson H.B. No. 1378
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the recovery by an electric utility of certain expenses
8	8	relating to weather-related events or natural disasters.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Chapter 36, Utilities Code, is amended by adding
11	11	Subchapter I to read as follows:
12	12	SUBCHAPTER I. SECURITIZATION OR RECOVERY OF
13	13	SYSTEM RESTORATION COSTS AND SELF-INSURANCE RESERVES
14	14	Sec. 36.401. PURPOSE AND INTENT. (a) The purpose of this
15	15	subchapter is to enable an electric utility to:
16	16	(1) obtain timely recovery of system restoration
17	17	costs;
18	18	(2) create, fund, eliminate shortages in, or replenish
19	19	self-insurance reserves at such levels as the commission may
20	20	authorize; and
21	21	(3) use appropriate mechanisms to recover system
22	22	restoration costs or self-insurance reserves, including through a
23	23	securitization financing mechanism because that type of financing
24	24	will lower the carrying costs associated with the recovery of the
25	25	costs, relative to the costs that would be incurred using
26	26	conventional financing methods.
27	27	(b) The legislature intends that:
28	28	(1) the securitization of system restoration costs and
29	29	self-insurance reserves under this subchapter will be accomplished
30	30	using the same procedures, standards, and protections for
31	31	securitization authorized under Subchapter G, Chapter 39, except as
32	32	provided by this subchapter; and
33	33	(2) the commission will ensure that the securitization
34	34	of system restoration costs and self-insurance reserves under this
35	35	subchapter provides greater tangible and quantifiable benefits to
36	36	ratepayers than would be achievable without the issuance of
37	37	transition bonds.
38	38	Sec. 36.402. DEFINITIONS AND APPLICABILITY OF TERMS. (a)
39	39	In this subchapter:
40	40	(1) "Self-insurance reserves" means the
41	41	self-insurance reserves authorized by Section 36.064 and, for
42	42	purposes of this subchapter, the term includes the cost of
43	43	creating, funding, eliminating a shortage in, or replenishing the
44	44	self-insurance reserves. For purposes of this subchapter, the term
45	45	applies to:
46	46	(A) shortages in self-insurance reserves in
47	47	existence on the effective date of this subchapter; and
48	48	(B) shortages in self-insurance reserves that
49	49	arise after the effective date of this subchapter.
50	50	(2) "System restoration costs" means reasonable and
51	51	necessary costs, including costs expensed, charged to
52	52	self-insurance reserves, capitalized, or otherwise financed, that
53	53	are incurred by an electric utility due to any activities conducted
54	54	by or on behalf of the electric utility in connection with the
55	55	restoration of service and infrastructure associated with electric
56	56	power outages affecting customers of the electric utility as the
57	57	result of any tropical storm or hurricane, ice or snow storm, flood,
58	58	or other weather-related event or natural disaster that occurred
59	59	during or after the calendar year 2008. The term includes:
60	60	(A) all costs related to mobilization, staging,
61	61	construction, reconstruction, replacement, or repair of electric
62	62	generation, transmission, distribution, or general plant
63	63	facilities, including all internal or external labor costs;
64	64	(B) reasonable estimates of the costs of an
65	65	activity or activities conducted or expected to be conducted by or
66	66	on behalf of the electric utility in connection with the
67	67	restoration of service or infrastructure associated with electric
68	68	power outages, except that such estimates are subject to true-up
69	69	and reconciliation after the actual costs are known; and
70	70	(C) carrying costs, at the electric utility's
71	71	last commission-authorized weighted average cost of capital, from
72	72	the date on which the system restoration costs were incurred until
73	73	the date that transition bonds are issued under this subchapter.
74	74	(b) For purposes of this subchapter, "financing order," as
75	75	defined by Section 39.302 and as used in this subchapter and
76	76	Subchapter G, Chapter 39, includes a financing order issued under
77	77	this subchapter authorizing the securitization of system
78	78	restoration costs or self-insurance reserves, or both.
79	79	(c) For purposes of this subchapter, "qualified costs," as
80	80	defined by Section 39.302 and as used in this subchapter and
81	81	Subchapter G, Chapter 39, includes:
82	82	(1) all of the electric utility's system restoration
83	83	costs and self-insurance reserves, net of any insurance proceeds or
84	84	governmental grants received by the utility at the time it files an
85	85	application for a financing order together with the costs of
86	86	issuing, supporting, and servicing transition bonds and any costs
87	87	of retiring and refunding existing debt and equity securities of an
88	88	electric utility in connection with the issuance of transition
89	89	bonds under this subchapter;
90	90	(2) the costs to the commission of acquiring
91	91	professional services for the purpose of evaluating proposed
92	92	transactions under this subchapter; and
93	93	(3) costs associated with ancillary agreements such as
94	94	any bond insurance policy, letter of credit, reserve account,
95	95	surety bond, swap arrangement, hedging arrangement, liquidity or
96	96	credit support arrangement, or other financial arrangement entered
97	97	into in connection with the issuance or payment of transition
98	98	bonds.
99	99	(d) For purposes of this subchapter, "transition bonds," as
100	100	defined by Section 39.302 and as used in this subchapter and
101	101	Subchapter G, Chapter 39, includes transition bonds issued in
102	102	association with the recovery of system restoration costs or
103	103	self-insurance reserves, or both. Transition bonds issued to
104	104	securitize system restoration costs or self-insurance reserves may
105	105	be referred to as "system restoration bonds" or by any other term
106	106	acceptable to the issuer and underwriters of the transition bonds.
107	107	(e) For purposes of this subchapter, "transition charges,"
108	108	as defined by Section 39.302 and as used in this subchapter and
109	109	Subchapter G, Chapter 39, includes nonbypassable amounts to be
110	110	charged for the use or availability of electric services, approved
111	111	by the commission under a financing order to recover system
112	112	restoration costs, self-insurance reserves, or both, that shall be
113	113	collected by an electric utility, its successors, an assignee, or
114	114	other collection agents as provided for in the financing order.
115	115	Transition charges approved by the commission under a financing
116	116	order to recover system restoration costs, self-insurance
117	117	reserves, or both, may be referred to as "system restoration
118	118	charges" or by any other term acceptable to the issuer and
119	119	underwriters of the transition bonds.
120	120	Sec. 36.403. SUBCHAPTER CONTROLS. To the extent of any
121	121	conflict between this subchapter and Subchapter G, Chapter 39, in
122	122	relation to the securitization of system restoration costs or
123	123	self-insurance reserves, the provisions of this subchapter
124	124	control.
125	125	Sec. 36.404. LIMITATION ON USE OF TRANSITION BOND PROCEEDS.
126	126	The proceeds of the transition bonds issued under this subchapter
127	127	may be used only for:
128	128	(1) reducing the amount of recoverable system
129	129	restoration costs, as determined by the commission in accordance
130	130	with this subchapter, including the refinancing or retirement of
131	131	utility debt or equity; or
132	132	(2) creating, funding, eliminating shortages in, or
133	133	replenishing self-insurance reserves.
134	134	Sec. 36.405. DETERMINATION OF SYSTEM RESTORATION COSTS AND
135	135	SELF-INSURANCE RESERVES. (a) An electric utility is entitled to:
136	136	(1) recover system restoration costs and
137	137	self-insurance reserves under a financing order issued under this
138	138	subchapter; or
139	139	(2) seek, in its next base rate proceeding or through
140	140	any other proceeding authorized by Subchapter C or D, the recovery
141	141	of amounts not otherwise recovered under this subchapter, including
142	142	system restoration costs not yet incurred at the time an
143	143	application is filed under Subsection (b).
144	144	(b) An electric utility may file an application with the
145	145	commission seeking a determination of:
146	146	(1) the amount necessary to create, fund, eliminate a
147	147	shortage in, or replenish self-insurance reserves;
148	148	(2) the amount of system restoration costs eligible
149	149	for recovery and securitization; or
150	150	(3) both amounts described by Subdivisions (1) and
151	151	(2).
152	152	(c) The commission by rule may prescribe the form of an
153	153	application under Subsection (b) and the information reasonably
154	154	necessary to support the determinations that are the subject of an
155	155	application. If an electric utility files an application under
156	156	Subsection (b) before the commission has adopted rules for purposes
157	157	of this subsection or before the rules have taken effect, the
158	158	commission shall accept the application and the commission may not
159	159	reject the application as incomplete.
160	160	(d) The commission shall issue an order that states the
161	161	amount, determined by the commission, necessary to create, fund,
162	162	eliminate a shortage in, or replenish self-insurance reserves, or
163	163	the amount of system restoration costs eligible for recovery and
164	164	securitization, or both, not later than the 150th day after the date
165	165	an electric utility files an application under Subsection (b).
166	166	(d-1) The 150-day period provided by Subsection (d) begins
167	167	on the date the electric utility files an application described by
168	168	Subsection (b), even if the electric utility files the application
169	169	before the effective date of this subchapter. This subsection
170	170	expires April 1, 2010.
171	171	(e) An electric utility may file an application for a
172	172	financing order before the end of the 150-day period provided by
173	173	Subsection (d). The commission shall issue a financing order under
174	174	this subchapter not later than the 90th day after the date the
175	175	utility files the request for a financing order. Notwithstanding
176	176	the 90-day period provided by this subsection, the commission is
177	177	not required to issue the financing order until the commission has
178	178	issued an order under Subsection (d) determining the amount
179	179	necessary to create, replenish, or eliminate a shortage in
180	180	self-insurance reserves, or the amount of system restoration costs
181	181	eligible for recovery and securitization, or both, if applicable.
182	182	(f) A determination made by the commission before the
183	183	effective date of this subchapter of an electric utility's eligible
184	184	system restoration costs or self-insurance reserves may provide the
185	185	basis for the utility's application for a financing order under
186	186	this subchapter and Subchapter G, Chapter 39. A previous
187	187	commission determination does not preclude the utility from
188	188	requesting recovery of additional system restoration costs or
189	189	self-insurance reserves eligible to be recovered under this
190	190	subchapter, but not previously authorized by the commission.
191	191	(g) A rate proceeding under Subchapter C or D is not
192	192	required to determine the amount of recoverable system restoration
193	193	costs or self-insurance reserves as provided by this section or for
194	194	the issuance of a financing order.
195	195	Sec. 36.406. STANDARDS AND PROCEDURES FOR FINANCING ORDER.
196	196	(a) The procedures and standards of this subchapter and the
197	197	provisions of Subchapter G, Chapter 39, govern an electric
198	198	utility's application for, and the commission's issuance of, a
199	199	financing order to provide for the securitization of system
200	200	restoration costs, self-insurance reserves, or both, or to
201	201	otherwise provide for the recovery of system restoration costs,
202	202	self-insurance reserves, or both.
203	203	(b) Notwithstanding any other provisions of this subchapter
204	204	or of Section 39.301 for determining tangible and quantifiable
205	205	benefits to ratepayers, if the commission determines that it is in
206	206	the public interest to use securitization financing for the
207	207	recovery of system restoration costs or to create, fund, eliminate
208	208	shortages in, or replenish self-insurance reserves, the commission
209	209	may issue a financing order for that securitization financing.
210	210	(c) Subject to the standards, procedures, and tests
211	211	provided by this subchapter and Subchapter G, Chapter 39, the
212	212	commission shall adopt a financing order on the application of the
213	213	utility to recover its system restoration costs or self-insurance
214	214	reserves.
215	215	(d) If the commission determines, on its own motion or on a
216	216	complaint by an affected person, that it is in the public interest
217	217	to securitize under this subchapter the amounts needed for an
218	218	electric utility to recover its system restoration costs or to
219	219	create, fund, eliminate shortages in, or replenish a utility's
220	220	self-insurance reserve, the commission shall require the utility to
221	221	file an application for a financing order.
222	222	(e) On the commission's issuance of a financing order
223	223	allowing for recovery and securitization of system restoration
224	224	costs or self-insurance reserves, or both, this subchapter and
225	225	Subchapter G, Chapter 39, continue to govern:
226	226	(1) the financing order and the rights and interests
227	227	established by the order; and
228	228	(2) transition bonds issued pursuant to the financing
229	229	order.
230	230	Sec. 36.407. NONBYPASSABLE CHARGES. The commission shall
231	231	include in a financing order issued under this subchapter terms
232	232	necessary to ensure that the imposition and collection of
233	233	transition charges for the recovery of system restoration costs and
234	234	self-insurance reserves are nonbypassable by:
235	235	(1) imposing restrictions on bypassability of the type
236	236	provided for in Chapter 39; or
237	237	(2) alternative means as the commission considers to
238	238	be appropriate and consistent with the purposes of securitization.
239	239	Sec. 36.408. TREATMENT OF ESTIMATED COSTS AFTER TRUE-UP AND
240	240	RECONCILIATION. (a) The commission may provide a process for
241	241	true-up and reconciliation of system restoration costs subject to
242	242	an order under this subchapter.
243	243	(b) If the commission determines as a result of a true-up
244	244	and reconciliation proceeding that the actual costs incurred are
245	245	less than estimated costs included in a determination under this
246	246	subchapter of system restoration costs, the commission shall take
247	247	the difference between actual and estimated costs into account in:
248	248	(1) the utility's next base rate proceeding; or
249	249	(2) any subsequent proceeding, other than a true-up
250	250	proceeding under Section 39.307, in which the commission considers
251	251	system restoration costs.
252	252	Sec. 36.409. INSURANCE PROCEEDS OR GOVERNMENTAL GRANTS
253	253	AFFECTING SYSTEM RESTORATION COSTS. (a) To the extent an electric
254	254	utility receives insurance proceeds or governmental grants that
255	255	compensate it for system restoration costs considered under this
256	256	subchapter, the utility shall use the amounts of those proceeds to
257	257	reduce the utility's system restoration costs recoverable from
258	258	customers.
259	259	(b) If the timing of a utility's receipt of insurance
260	260	proceeds or governmental grants prevents their inclusion as a
261	261	reduction to the system restoration costs that are securitized
262	262	under this subchapter, the commission shall take those insurance
263	263	proceeds and governmental grants into account in:
264	264	(1) the utility's next base rate proceeding; or
265	265	(2) any subsequent proceeding, other than a true-up
266	266	proceeding under Section 39.307, in which the commission considers
267	267	system restoration costs.
268	268	(c) To the extent that the utility receives insurance
269	269	proceeds or governmental grants that are used to reduce system
270	270	restoration costs, the commission shall impute interest on those
271	271	proceeds or grants at the same cost of capital included in the
272	272	utility's system restoration costs and until the date that the
273	273	proceeds or grants are used to reduce the amount of system
274	274	restoration costs that are securitized or otherwise reflected in
275	275	the rates of the utility.
276	276	Sec. 36.410. TAX OFFSETS AND TAX OBLIGATIONS. (a) The
277	277	amount of any accumulated deferred federal income taxes offset used
278	278	to determine the securitization total under this subchapter may not
279	279	be considered in future rate proceedings.
280	280	(b) The commission shall provide for an electric utility to
281	281	recover under this subchapter any tax obligation of the electric
282	282	utility arising from the utility's receipt of securitization bond
283	283	proceeds or from the collection and remittance of transition
284	284	charges.
285	285	Sec. 36.411. FUNCTIONALIZATION AND ALLOCATION OF SYSTEM
286	286	RESTORATION COSTS AND SELF-INSURANCE RESERVES. Notwithstanding
287	287	Section 39.303(c), system restoration costs and self-insurance
288	288	reserves shall be functionalized and allocated to customers in the
289	289	same manner as the corresponding facilities and related expenses
290	290	are functionalized and allocated in the utility's current base
291	291	rates.
292	292	Sec. 36.412. SURCHARGE AS ALTERNATIVE TO SECURITIZATION.
293	293	(a) If the commission determines that using securitization for
294	294	creating, funding, eliminating a shortage in, or replenishing all
295	295	or any portion of an electric utility's self-insurance reserves or
296	296	for the recovery of all or any portion of an electric utility's
297	297	system restoration costs is not beneficial to ratepayers of the
298	298	electric utility, under one or more of the tests applied to
299	299	determine those benefits, the commission shall allow the electric
300	300	utility to create, fund, eliminate a shortage in, or replenish the
301	301	remainder of its self-insurance reserves or recover the remainder
302	302	of its system restoration costs through an appropriate customer
303	303	surcharge mechanism, including carrying costs at the electric
304	304	utility's last commission-authorized weighted average cost of
305	305	capital, to the extent that the electric utility has not
306	306	securitized those costs.
307	307	(b) A rate proceeding under this chapter is not required to
308	308	determine and implement the surcharge mechanism allowed under
309	309	Subsection (a).
310	310	(c) The commission shall provide for a rider adopted under
311	311	Subsection (a) to be reduced on the final implementation of rates
312	312	resulting from the filing of a rate proceeding under Subchapter C or
313	313	D to the extent that the costs to the utility to create, fund,
314	314	eliminate a shortage in, or replenish self-insurance reserves or
315	315	recover system restoration costs are included in the electric
316	316	utility's base rates.
317	317	Sec. 36.413. LIMITATIONS ON RATES DO NOT AFFECT
318	318	APPLICABILITY OF SUBCHAPTER. Notwithstanding a rate freeze or
319	319	limitations on an electric utility's ability to change rates
320	320	authorized or imposed by any other provision of this title or by a
321	321	regulatory authority, an electric utility is entitled to create,
322	322	fund, eliminate a shortage in, or replenish self-insurance
323	323	reserves, or recover system restoration costs, or both, consistent
324	324	with the provisions of this subchapter.
325	325	Sec. 36.414. REVIEW OF COMMISSION ORDER. (a) A commission
326	326	order under this subchapter is not subject to rehearing and may be
327	327	reviewed only by appeal to a Travis County district court by a party
328	328	to the proceeding filed within 15 days after the order is signed by
329	329	the commission.
330	330	(b) The judgment of the district court may be reviewed only
331	331	by direct appeal to the Supreme Court of Texas filed within 15 days
332	332	after entry of judgment.
333	333	(c) All appeals shall be heard and determined by the
334	334	district court and the Supreme Court of Texas as expeditiously as
335	335	possible with lawful precedence over other matters.
336	336	(d) Review on appeal shall be based solely on the record
337	337	before the commission and briefs to the court and shall be limited
338	338	to whether the order conforms to the constitution and laws of this
339	339	state and the United States and is within the authority of the
340	340	commission under this chapter.
341	341	Sec. 36.415. SEVERABILITY. Effective on the date the first
342	342	utility transition bonds associated with system restoration costs
343	343	or self-insurance reserves are issued under this subchapter, if any
344	344	provision in this title or portion of this title is held to be
345	345	invalid or is invalidated, superseded, replaced, repealed, or
346	346	expires for any reason, that occurrence does not affect the
347	347	validity or continuation of this subchapter, Subchapter G, Chapter
348	348	39, as it applies to this subchapter, or any part of those
349	349	provisions, or any other provision of this title that is relevant to
350	350	the issuance, administration, payment, retirement, or refunding of
351	351	transition bonds or to any actions of the electric utility, its
352	352	successors, an assignee, a collection agent, or a financing party,
353	353	and those provisions shall remain in full force and effect.
354	354	SECTION 2. This Act takes effect immediately if it receives
355	355	a vote of two-thirds of all the members elected to each house, as
356	356	provided by Section 39, Article III, Texas Constitution. If this
357	357	Act does not receive the vote necessary for immediate effect, this
358	358	Act takes effect September 1, 2009.