Texas 2009 - 81st Regular

Texas House Bill HB2282 Compare Versions

Only one version of the bill is available at this time.

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1	1	81R11033 TRH-D
2	2	By: Thompson H.B. No. 2282
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to reregulation of retail electric services.
8	8	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
9	9	SECTION 1. The following provisions of the Utilities Code
10	10	are repealed:
11	11	(1) Sections 31.002(1), (4), (8), and (9);
12	12	(2) Chapter 39;
13	13	(3) Section 40.001;
14	14	(4) Section 40.003;
15	15	(5) Sections 40.051, 40.052, 40.053, 40.054, 40.055,
16	16	40.056, 40.057, 40.058, and 40.059;
17	17	(6) Section 41.001;
18	18	(7) Section 41.003;
19	19	(8) Sections 41.051, 41.052, 41.053, and 41.054;
20	20	(9) Sections 41.056, 41.057, and 41.058;
21	21	(10) Section 41.060; and
22	22	(11) Section 41.062.
23	23	SECTION 2. Sections 31.002(6), (17), (18), and (19),
24	24	Utilities Code, are amended to read as follows:
25	25	(6) "Electric utility" means a person or river
26	26	authority that owns or operates for compensation in this state
27	27	equipment or facilities to produce, generate, transmit,
28	28	distribute, sell, or furnish electricity in this state. The term
29	29	includes a lessee, trustee, or receiver of an electric utility and a
30	30	recreational vehicle park owner who does not comply with Subchapter
31	31	C, Chapter 184, with regard to the metered sale of electricity at
32	32	the recreational vehicle park. The term does not include:
33	33	(A) a municipal corporation;
34	34	(B) a qualifying facility;
35	35	(C) a power generation company;
36	36	(D) an exempt wholesale generator;
37	37	(E) a power marketer;
38	38	(F) a corporation described by Section 32.053 to
39	39	the extent the corporation sells electricity exclusively at
40	40	wholesale and not to the ultimate consumer;
41	41	(G) an electric cooperative;
42	42	(H) [a retail electric provider;
43	43	[(I)] this state or an agency of this state; or
44	44	(I) [(J)] a person not otherwise an electric
45	45	utility who:
46	46	(i) furnishes an electric service or
47	47	commodity only to itself, its employees, or its tenants as an
48	48	incident of employment or tenancy, if that service or commodity is
49	49	not resold to or used by others;
50	50	(ii) owns or operates in this state
51	51	equipment or facilities to produce, generate, transmit,
52	52	distribute, sell, or furnish electric energy to an electric
53	53	utility, if the equipment or facilities are used primarily to
54	54	produce and generate electric energy for consumption by that
55	55	person; or
56	56	(iii) owns or operates in this state a
57	57	recreational vehicle park that provides metered electric service in
58	58	accordance with Subchapter C, Chapter 184.
59	59	(17) "Retail electric provider" means a person that
60	60	sells electric energy to retail customers in this state. [A retail
61	61	electric provider may not own or operate generation assets.]
62	62	(18) "Separately metered" means metered by an
63	63	individual meter that is used to measure electric energy
64	64	consumption by a retail customer and for which the customer is
65	65	directly billed by a utility, [retail electric provider,] electric
66	66	cooperative, or municipally owned utility.
67	67	(19) "Transmission and distribution utility" means a
68	68	person or river authority that owns or operates for compensation in
69	69	this state equipment or facilities to transmit or distribute
70	70	electricity, except for facilities necessary to interconnect a
71	71	generation facility with the transmission or distribution network,
72	72	a facility not dedicated to public use, or a facility otherwise
73	73	excluded from the definition of "electric utility" under this
74	74	section, in a [qualifying] power region [certified under Section
75	75	39.152, but does not include a municipally owned utility or an
76	76	electric cooperative].
77	77	SECTION 3. Subchapter A, Chapter 32, Utilities Code, is
78	78	amended by adding Section 32.0013 to read as follows:
79	79	Sec. 32.0013. COMMISSION JURISDICTION RELATING TO
80	80	REREGULATION OF ELECTRIC UTILITIES. The commission has all
81	81	necessary jurisdiction to take any action necessary to effectuate
82	82	the reregulation of retail electric service in an area in which
83	83	customer choice was introduced before January 1, 2010.
84	84	SECTION 4. Subtitle B, Title 2, Utilities Code, is amended
85	85	by adding Chapter 34 to read as follows:
86	86	CHAPTER 34. ELECTRICAL PLANNING
87	87	SUBCHAPTER A. GENERAL PROVISIONS
88	88	Sec. 34.001. ADOPTION OF INTEGRATED RESOURCE PLANNING
89	89	PROCESS. (a) The commission by rule shall develop an integrated
90	90	resource planning process to provide reliable energy service at the
91	91	lowest reasonable system cost.
92	92	(b) In determining the lowest reasonable system cost of an
93	93	electric utility's integrated resource plan, the commission shall
94	94	consider:
95	95	(1) direct costs;
96	96	(2) the effect on the rates and bills of various types
97	97	of customers;
98	98	(3) minimization of the risks of future fuel costs and
99	99	regulations;
100	100	(4) the appropriateness and reliability of the mix of
101	101	resources; and
102	102	(5) the cost of compliance with environmental
103	103	protection requirements of all applicable state and federal laws,
104	104	rules, and orders.
105	105	(c) An appropriate and reliable mix under Subsection (b)(4)
106	106	may include a portfolio of cost-effective sources of power,
107	107	including fueled and nonfueled resources, such as renewable
108	108	resources and conservation measures, and a mixture of long-term and
109	109	short-term contracts.
110	110	(d) In establishing a requirement under this chapter,
111	111	including a reporting requirement, the commission shall consider
112	112	and recognize the different capabilities of small and large
113	113	electric utilities.
114	114	Sec. 34.002. STATEWIDE INTEGRATED RESOURCE PLAN. (a) The
115	115	commission by rule shall adopt and periodically update a statewide
116	116	integrated resource plan that includes the commission's long-term
117	117	resource planning goals. The commission shall notify each electric
118	118	utility of the approval of the plan.
119	119	(b) The commission shall send a report on the statewide
120	120	integrated resource plan to the governor when it adopts or revises
121	121	the plan and make the report available to the public.
122	122	(c) The report on the statewide integrated resource plan
123	123	must include:
124	124	(1) historical data for electric consumption
125	125	statewide and by each electric utility;
126	126	(2) historical data for electric generation by each
127	127	electric utility and by type of capacity, including alternative
128	128	energy sources;
129	129	(3) an inventory of generation capacity statewide and
130	130	by each electric utility;
131	131	(4) quantitative data on demand-side management
132	132	programs to the extent the commission determines necessary;
133	133	(5) each generating electric utility's forecast
134	134	without adjustment;
135	135	(6) the commission's long-term resource planning goals
136	136	included in the plan;
137	137	(7) a projection of the need for electric services;
138	138	(8) a description of the approved individual
139	139	integrated resource plan of each electric utility; and
140	140	(9) an assessment of transmission planning being
141	141	conducted by electric utilities in this state.
142	142	Sec. 34.003. PROMOTION OF RENEWABLE ENERGY TECHNOLOGIES.
143	143	The commission shall adopt rules consistent with the integrated
144	144	resource planning process to promote the development of renewable
145	145	energy technologies.
146	146	Sec. 34.004. REVIEW OF STATE TRANSMISSION SYSTEM. In
147	147	carrying out its duties related to the integrated resource planning
148	148	process, the commission may review this state's transmission system
149	149	and make recommendations to electric utilities on the need to build
150	150	new power lines, upgrade power lines, and make other necessary
151	151	improvements and additions.
152	152	[Sections 34.005-34.020 reserved for expansion]
153	153	SUBCHAPTER B. PRELIMINARY INTEGRATED RESOURCE PLAN
154	154	Sec. 34.021. PRELIMINARY INTEGRATED RESOURCE PLAN
155	155	REQUIRED. (a) Every three years each nongenerating electric
156	156	utility planning to construct generating resources and each
157	157	generating electric utility shall submit to the commission a
158	158	preliminary integrated resource plan covering a 10-year period.
159	159	(b) The commission by rule shall:
160	160	(1) establish a staggered schedule for the submission
161	161	of integrated resource plans by electric utilities;
162	162	(2) prescribe the form and manner in which a plan must
163	163	be submitted;
164	164	(3) adopt filing requirements and schedules; and
165	165	(4) prescribe the methods by which an electric utility
166	166	may recover supply-side and demand-side costs.
167	167	(c) The commission by rule may:
168	168	(1) define the scope and nature of public
169	169	participation in the development of the integrated resource plan;
170	170	and
171	171	(2) establish the general guidelines an electric
172	172	utility shall use to evaluate and to select or reject a resource,
173	173	including procedures governing the solicitation process.
174	174	Sec. 34.022. CONTENTS OF PRELIMINARY INTEGRATED RESOURCE
175	175	PLAN. (a) A preliminary integrated resource plan must include:
176	176	(1) the electric utility's forecast of future demands;
177	177	(2) an estimate of the energy savings and demand
178	178	reduction the electric utility can achieve during the time covered
179	179	by the plan by use of demand-side management resources and the range
180	180	of possible costs for those resources;
181	181	(3) if additional supply-side resources are needed to
182	182	meet future demand, an estimate of:
183	183	(A) the amount and operational characteristics
184	184	of the additional capacity needed;
185	185	(B) the types of viable supply-side resources for
186	186	meeting that need; and
187	187	(C) the range of probable costs of those
188	188	resources;
189	189	(4) if necessary, proposed requests for proposals to
190	190	be used in a solicitation of demand-side or supply-side resources,
191	191	or both;
192	192	(5) the specific criteria the electric utility will
193	193	use to evaluate and to select or reject demand-side or supply-side
194	194	resources;
195	195	(6) the methods by which the electric utility intends
196	196	to monitor demand-side or supply-side resources, or both as
197	197	appropriate, after selection;
198	198	(7) the method by which the electric utility intends
199	199	to allocate costs;
200	200	(8) a description of how the electric utility will
201	201	achieve equity among customer classes and provide demand-side
202	202	programs to each customer class, including tenants and low-income
203	203	ratepayers;
204	204	(9) any proposed incentive factors; and
205	205	(10) any other information the commission requires.
206	206	(b) If the commission adopts under Section 34.021(c) the
207	207	general guidelines an electric utility shall use to evaluate and to
208	208	select or reject a resource, the specific criteria proposed by the
209	209	electric utility under Subsection (a)(5) may deviate from those
210	210	guidelines only on a showing of good cause.
211	211	Sec. 34.023. PUBLIC HEARING ON PRELIMINARY INTEGRATED
212	212	RESOURCE PLAN. (a) If a preliminary integrated resource plan
213	213	includes a proposed solicitation of demand-side or supply-side
214	214	resources, the commission, on its own motion or on the motion of the
215	215	electric utility or an affected person, may convene a public
216	216	hearing on the adequacy and merits of the plan.
217	217	(b) Any interested person may intervene in the hearing and,
218	218	at the hearing, may present evidence and cross-examine witnesses
219	219	regarding the contents and adequacy of the preliminary integrated
220	220	resource plan.
221	221	(c) Discovery by a participant in the hearing is limited to:
222	222	(1) an issue relating to the development of the
223	223	preliminary integrated resource plan;
224	224	(2) a fact issue included in the plan; and
225	225	(3) other issues the commission is required to decide
226	226	relating to the plan.
227	227	(d) A hearing before the commission is not required for a
228	228	preliminary integrated resource plan filed by a river authority or
229	229	generating electric cooperative that does not intend to build a new
230	230	generating plant.
231	231	Sec. 34.024. INTERIM ORDER ON PRELIMINARY INTEGRATED
232	232	RESOURCE PLAN; DEADLINE. (a) After conducting a hearing on a
233	233	preliminary integrated resource plan under Section 34.023, the
234	234	commission shall determine:
235	235	(1) whether the plan is based on substantially
236	236	accurate data and an adequate method of forecasting;
237	237	(2) whether the plan identifies and takes into account
238	238	any present and projected reduction in the demand for energy that
239	239	may result from cost-effective measures to improve conservation and
240	240	energy efficiency in various customer classes of the area being
241	241	served;
242	242	(3) if additional supply-side resources are needed to
243	243	meet future demand, whether the plan adequately demonstrates:
244	244	(A) the amount and operational characteristics
245	245	of the additional capacity needed;
246	246	(B) the types of viable supply-side resources for
247	247	meeting that need; and
248	248	(C) the range of probable costs of those
249	249	resources;
250	250	(4) whether the plan describes opportunities for
251	251	appropriate persons to participate in developing the plan;
252	252	(5) whether the specific criteria the electric utility
253	253	will use to evaluate and to select or reject resources are
254	254	reasonable and consistent with the guidelines of the integrated
255	255	resource planning process;
256	256	(6) whether the cost allocation method proposed by the
257	257	electric utility is reasonable;
258	258	(7) how the electric utility will achieve equity among
259	259	customer classes and provide demand-side programs to each customer
260	260	class, including tenants and low-income ratepayers; and
261	261	(8) whether any incentive factors are appropriate and,
262	262	if so, the levels of the factors.
263	263	(b) Not later than the 180th day after the date an electric
264	264	utility submits a preliminary integrated resource plan, the
265	265	commission shall issue an interim order approving the plan,
266	266	approving the plan as modified by the commission, or remanding the
267	267	plan for additional proceedings. The commission may extend the
268	268	deadline for not more than 30 days for extenuating circumstances
269	269	encountered in the development and processing of the plan if the
270	270	circumstances are fully explained and agreed on by the
271	271	commissioners.
272	272	[Sections 34.025-34.050 reserved for expansion]
273	273	SUBCHAPTER C. RESOURCE SOLICITATION
274	274	Sec. 34.051. COMMENCEMENT OF SOLICITATION. (a) After the
275	275	commission approves an electric utility's preliminary integrated
276	276	resource plan, the utility shall conduct solicitations of
277	277	demand-side and supply-side resources as prescribed by the plan.
278	278	(b) In addition to soliciting resources from a
279	279	nonaffiliated third party, an electric utility may:
280	280	(1) prepare and submit a bid of a new utility
281	281	demand-side management program as prescribed by Section 34.053;
282	282	(2) receive bids from one or more affiliates; and
283	283	(3) request a certificate of convenience and necessity
284	284	for a new rate-based generating plant.
285	285	Sec. 34.052. SUBMISSION OF BIDS; CONFIDENTIALITY. (a)
286	286	Each bidder under Section 34.051, including the electric utility
287	287	conducting the solicitation and each bidding affiliate, shall
288	288	submit two copies of its bid to the commission. The commission shall
289	289	ensure that the electric utility has access to all bids at the same
290	290	time.
291	291	(b) The commission shall keep a copy of each bid submitted
292	292	by the electric utility conducting the solicitation or a bidding
293	293	affiliate to determine whether the utility complied with the
294	294	criteria established for conducting the solicitation.
295	295	(c) A bid submitted or retained under this section is
296	296	confidential and is not subject to disclosure under Chapter 552,
297	297	Government Code.
298	298	Sec. 34.053. ELECTRIC UTILITY DEMAND-SIDE MANAGEMENT
299	299	PROGRAMS. (a) An electric utility that intends to use a proposed
300	300	demand-side management program to meet a need identified by the
301	301	utility's preliminary integrated resource plan must prepare a bid
302	302	reflecting that resource.
303	303	(b) A bid prepared by an electric utility under this section
304	304	must comply with the solicitation, evaluation, selection, and
305	305	rejection criteria specified by the utility's preliminary
306	306	integrated resource plan. The electric utility may not give
307	307	preferential treatment or consideration to the bid.
308	308	Sec. 34.054. QUALIFYING FACILITY BIDS; AVOIDED COSTS. (a)
309	309	The submission of a bid under this chapter by a qualifying facility,
310	310	regardless of whether the bid is accepted or rejected, with respect
311	311	to the capacity need for which the bid is submitted:
312	312	(1) is a waiver by the qualifying facility of any right
313	313	it may otherwise have under law to sell capacity to the electric
314	314	utility;
315	315	(2) represents the qualifying facility's agreement to
316	316	negotiate a rate for the purchase of capacity and terms relating to
317	317	the purchase that differ from the rate or terms that would otherwise
318	318	be required by 18 C.F.R. Part 292, Subpart C; and
319	319	(3) is a waiver by the qualifying facility of its right
320	320	to the rate or terms for a purchase of capacity by the electric
321	321	utility that might otherwise be required by 18 C.F.R. Part 292,
322	322	Subpart C.
323	323	(b) The avoided capacity costs under 18 C.F.R. Part 292,
324	324	Subpart C, of an electric utility that has submitted a preliminary
325	325	integrated resource plan to the commission under this chapter is $0
326	326	and remains $0, with respect to any capacity needs shown in the
327	327	preliminary plan or final plan that are to be satisfied by resources
328	328	approved in the utility's final plan.
329	329	(c) This section does not affect the validity of a contract
330	330	entered into between an electric utility and a qualifying facility
331	331	for any purchase.
332	332	Sec. 34.055. EVALUATION OF BIDS; NEGOTIATION OF CONTRACTS.
333	333	(a) An electric utility shall evaluate each bid submitted,
334	334	including an affiliate bid, in accordance with the criteria
335	335	specified by the utility's preliminary integrated resource plan and
336	336	shall negotiate each necessary contract.
337	337	(b) An electric utility is not required to accept a bid and
338	338	may reject any or all bids in accordance with the selection and
339	339	rejection criteria specified by the utility's preliminary
340	340	integrated resource plan.
341	341	Sec. 34.056. APPLICATION FOR CERTIFICATE OF CONVENIENCE AND
342	342	NECESSITY FOR RESOURCE NOT INCLUDED IN PRELIMINARY PLAN. If the
343	343	results of the solicitation and contract negotiations do not meet
344	344	the supply-side needs identified by the electric utility's
345	345	preliminary integrated resource plan, the utility may apply for a
346	346	certificate of convenience and necessity for a utility-owned
347	347	resource addition, notwithstanding that a solicitation was
348	348	conducted and the resource addition was not included in the
349	349	approved plan.
350	350	[Sections 34.057-34.100 reserved for expansion]
351	351	SUBCHAPTER D. FINAL INTEGRATED RESOURCE PLAN
352	352	Sec. 34.101. SUBMISSION OF FINAL INTEGRATED RESOURCE PLAN.
353	353	After conducting each solicitation and negotiating each contract,
354	354	an electric utility shall submit a proposed final integrated
355	355	resource plan to the commission. The proposed plan must include:
356	356	(1) the results of each solicitation;
357	357	(2) any contracts for resources;
358	358	(3) the terms under which the electric utility will
359	359	provide resources to meet a need identified by the preliminary
360	360	integrated resource plan, if the electric utility accepts a bid
361	361	submitted under Section 34.053; and
362	362	(4) an application for a certificate of convenience
363	363	and necessity, if necessary.
364	364	Sec. 34.102. PUBLIC HEARING ON FINAL INTEGRATED RESOURCE
365	365	PLAN. (a) The commission, on request by an affected person, shall
366	366	convene a public hearing on the reasonableness and
367	367	cost-effectiveness of a proposed final integrated resource plan.
368	368	The commission shall convene the hearing, if requested, not later
369	369	than the 90th day after the date the electric utility files its
370	370	proposed plan.
371	371	(b) Any interested person may intervene in the hearing and,
372	372	at the hearing, may present evidence and cross-examine witnesses
373	373	regarding the reasonableness and cost-effectiveness of the
374	374	proposed final integrated resource plan.
375	375	(c) A party to the hearing may not litigate or conduct
376	376	discovery on an issue that was or could have been litigated in
377	377	connection with the filing of the electric utility's preliminary
378	378	integrated resource plan.
379	379	(d) To the extent permitted by federal law, the commission
380	380	may issue a written order for access to the books, accounts,
381	381	memoranda, contracts, or other records of an exempt wholesale
382	382	generator or power marketer selling energy at wholesale to an
383	383	electric utility, if access is required for the effective discharge
384	384	of the commission's regulatory responsibilities under this
385	385	subtitle. The materials obtained by the commission under this
386	386	subsection are confidential and are not subject to disclosure under
387	387	Chapter 552, Government Code.
388	388	Sec. 34.103. RULING ON FINAL INTEGRATED RESOURCE PLAN;
389	389	DEADLINE. (a) After conducting a hearing on a proposed final
390	390	integrated resource plan under Section 34.102, the commission shall
391	391	determine whether:
392	392	(1) the final plan was developed in accordance with
393	393	the electric utility's preliminary integrated resource plan and
394	394	commission rules;
395	395	(2) the resource solicitations, evaluations,
396	396	selections, and rejections were conducted in accordance with the
397	397	criteria included in the utility's preliminary plan;
398	398	(3) the final plan is cost-effective;
399	399	(4) the final plan is equitable among customer classes
400	400	and provides demand-side programs to each customer class, including
401	401	tenants and low-income ratepayers;
402	402	(5) the commission should certify each contract and
403	403	electric utility bid submitted under Section 34.053 that resulted
404	404	from the solicitations; and
405	405	(6) the commission should grant a requested
406	406	certificate of convenience and necessity for an electric
407	407	utility-owned resource addition.
408	408	(b) Not later than the 180th day after the date an electric
409	409	utility submits a proposed final integrated resource plan, the
410	410	commission shall issue a final order approving the plan, approving
411	411	the plan as modified by the commission, or remanding the plan for
412	412	additional proceedings.
413	413	Sec. 34.104. CERTIFICATION OF CONTRACTS. (a) In
414	414	determining whether to certify a supply-side or demand-side
415	415	contract that results from a solicitation, the commission shall
416	416	consider:
417	417	(1) the reliability, financial condition, and safety
418	418	of the resource contract; and
419	419	(2) whether the solicitation, evaluation, and
420	420	selection of the resource contract were conducted in accordance
421	421	with the criteria included in the electric utility's preliminary
422	422	integrated resource plan.
423	423	(b) In addition to the considerations in Subsection (a), if
424	424	a contract proposed for certification is between an electric
425	425	utility and its affiliate, the commission shall determine whether:
426	426	(1) the utility treated and considered the affiliate's
427	427	bid in the same manner it treated and considered each other bid
428	428	intended to meet the same resource needs;
429	429	(2) the transaction will benefit consumers;
430	430	(3) the transaction violates any state law, including
431	431	least-cost planning;
432	432	(4) the transaction provides the affiliate with an
433	433	unfair competitive advantage by virtue of its affiliation or
434	434	association with the utility;
435	435	(5) the transaction is in the public interest; and
436	436	(6) the commission has sufficient regulatory
437	437	authority, resources, and access to the books and records of the
438	438	utility and its affiliate to make the determination required by
439	439	this subsection.
440	440	(c) The commission may not certify a contract for a new
441	441	purchase of power by an electric utility unless the utility has
442	442	determined, after giving consideration to consistently applied
443	443	regional or national reliability standards, guidelines, or
444	444	criteria, that:
445	445	(1) the contract would not unreasonably impair the
446	446	continued reliability of electric systems affected by the purchase;
447	447	and
448	448	(2) the purchase can reasonably be expected to produce
449	449	benefits to customers of the purchasing utility.
450	450	(d) Commission certification of a resource contract under
451	451	this section does not negate the necessity of the resource to comply
452	452	with all applicable environmental and siting regulations.
453	453	(e) In establishing an electric utility's rates, a
454	454	regulatory authority shall consider a payment made under a
455	455	certified contract to be a reasonable and necessary operating
456	456	expense of the utility during the period for which the certified
457	457	contract is effective. A regulatory authority may provide for
458	458	monthly recovery of approved costs of the contract as those costs
459	459	are incurred, including any markup allowed by the commission.
460	460	Sec. 34.105. CERTIFICATE OF CONVENIENCE AND NECESSITY. (a)
461	461	In determining whether to grant a certificate of convenience and
462	462	necessity requested by an electric utility in the utility's
463	463	proposed final integrated resource plan, the commission shall
464	464	consider:
465	465	(1) the effect of granting the certificate on the
466	466	recipient of the certificate and on any electric utility serving
467	467	the proximate area; and
468	468	(2) other factors, such as:
469	469	(A) community values;
470	470	(B) recreational and park areas;
471	471	(C) historical and aesthetic values;
472	472	(D) environmental integrity; and
473	473	(E) the probable improvement of service or
474	474	lowering of cost to consumers in the area if the certificate is
475	475	granted.
476	476	(b) The commission shall grant a requested certificate of
477	477	convenience and necessity as part of the commission's approval of a
478	478	final integrated resource plan if the commission finds that:
479	479	(1) the proposed resource addition is necessary under
480	480	the plan;
481	481	(2) the proposed resource addition is the best and
482	482	most economical choice of technology for the service area; and
483	483	(3) cost-effective conservation and other
484	484	cost-effective alternative energy sources cannot reasonably meet
485	485	the need.
486	486	[Sections 34.106-34.150 reserved for expansion]
487	487	SUBCHAPTER E. ACQUISITION OF RESOURCES OUTSIDE THE
488	488	INTEGRATED RESOURCE PLANNING PROCESS
489	489	Sec. 34.151. EXEMPTIONS FROM SOLICITATION PROCESS. (a)
490	490	The commission shall adopt rules allowing an electric utility to
491	491	add new or incremental resources outside the solicitation process,
492	492	consistent with the utility's last approved integrated resource
493	493	planning goals, including resources listed in Subsection (b).
494	494	(b) Consistent with an electric utility's last approved
495	495	integrated resource planning goals, if any, an electric utility,
496	496	including a nongenerating electric utility, may add new or
497	497	incremental resources outside the solicitation process, including:
498	498	(1) contract renegotiation for existing capacity from
499	499	an electric cooperative or nonaffiliated power generating
500	500	facility;
501	501	(2) electric cooperative or nonaffiliated demand-side
502	502	management programs or renewable resources;
503	503	(3) capacity purchases with two-year or shorter terms
504	504	from an electric cooperative or nonaffiliated power supplier;
505	505	(4) capacity purchases necessary to satisfy
506	506	unanticipated emergency conditions;
507	507	(5) the exercise of an option in a purchased power
508	508	contract with an electric cooperative or nonaffiliated supplier;
509	509	and
510	510	(6) renewable distributed resources, located at or
511	511	near the point of consumption, if the resources are less costly than
512	512	transmission extensions or upgrades.
513	513	(c) The addition of new or incremental resources by an
514	514	electric utility under Subsection (b) does not require an amendment
515	515	to the utility's integrated resource plan.
516	516	Sec. 34.152. NONGENERATING ELECTRIC UTILITY SOLICITATIONS.
517	517	(a) A nongenerating electric utility not planning to construct
518	518	generating facilities shall conduct a solicitation of resources if
519	519	the utility seeks to purchase from a wholesale power supplier other
520	520	than the utility's existing power supplier more than 25 percent of
521	521	the utility's peak demand or more than 70 megawatts. A
522	522	nongenerating electric utility is not required to conduct a
523	523	solicitation for a purchase from an existing power supplier and the
524	524	utility may add new or incremental resources outside the
525	525	solicitation process as provided by Section 34.151.
526	526	(b) The commission, on request by the nongenerating
527	527	electric utility, may review a proposed contract for resources
528	528	resulting from a solicitation to determine the contract's
529	529	reasonableness. The commission shall certify the proposed contract
530	530	if the commission finds that the contract is reasonable. The
531	531	commission shall make its determination not later than the 90th day
532	532	after the date the proposed contract is submitted.
533	533	(c) This section does not alter or amend a wholesale power
534	534	supply contract executed before January 1, 2010.
535	535	Sec. 34.153. EXEMPTION FOR CERTAIN FACILITIES. (a) To
536	536	provide for the orderly transition to an integrated resource
537	537	planning process and to avoid delays in the construction of
538	538	resources necessary to provide electric service, an integrated
539	539	resource plan is not required for issuance of a certificate of
540	540	convenience and necessity for the construction of a generating
541	541	facility if:
542	542	(1) the electric utility has conducted a solicitation
543	543	for resources to meet the need identified by the utility's notice of
544	544	intent in accordance with commission rules in effect at the time of
545	545	the solicitation; and
546	546	(2) the electric utility has submitted to the
547	547	commission the results of the solicitation and an application for
548	548	certification of the facility to meet the need identified by the
549	549	utility's notice of intent.
550	550	(b) The commission shall grant a certificate of convenience
551	551	and necessity for a generating facility to which this section
552	552	applies if:
553	553	(1) the facility is needed to meet future demand;
554	554	(2) the facility is the best and most economical
555	555	choice of technology for the service area; and
556	556	(3) cost-effective conservation and cost-effective
557	557	alternative energy sources cannot reasonably meet the need.
558	558	[Sections 34.154-34.170 reserved for expansion]
559	559	SUBCHAPTER F. MISCELLANEOUS PROVISIONS
560	560	Sec. 34.171. COST RECOVERY AND INCENTIVES. In carrying out
561	561	its duties related to the integrated resource planning process, the
562	562	commission may:
563	563	(1) allow timely recovery of the reasonable costs of
564	564	conservation, load management, and purchased power,
565	565	notwithstanding Section 36.201; and
566	566	(2) authorize additional incentives for conservation,
567	567	load management, purchased power, and renewable resources.
568	568	Sec. 34.172. RECONCILIATION OF RECOVERED COSTS. (a) To the
569	569	extent that the commission authorizes an electric utility to
570	570	recover the costs of demand-side management programs,
571	571	conservation, load management, or purchased power through cost
572	572	recovery factors, the commission shall make a final reconciliation
573	573	of the costs recovered through the cost recovery factors.
574	574	(b) The commission shall adopt rules regarding:
575	575	(1) the timing of reconciliations for each cost
576	576	recovery factor;
577	577	(2) the information an electric utility must file in
578	578	support of each reconciliation; and
579	579	(3) other matters necessary to accomplish the
580	580	reconciliation.
581	581	(c) Each reconciliation must:
582	582	(1) review the reasonableness of the electric
583	583	utility's administration of the contracts and programs the costs of
584	584	which are being reconciled; and
585	585	(2) reconcile the revenue collected under each cost
586	586	recovery factor and the costs that the utility incurred on
587	587	purchased power, demand-side management, conservation, or load
588	588	management, as applicable, during the reconciliation period.
589	589	Sec. 34.173. RESOURCE PLANNING EXPENSES. (a) To the extent
590	590	that an electric utility is required by the commission to reimburse
591	591	a municipality for expenses incurred while participating in a
592	592	proceeding under this chapter, the commission shall, as part of the
593	593	commission's approval of the utility's integrated resource plan,
594	594	authorize a surcharge to be included in the utility's rates to allow
595	595	the utility to recover the amount paid to the municipality before
596	596	the utility's next preliminary integrated resource plan is filed.
597	597	(b) An electric utility may recover its reasonable expenses
598	598	arising from planning, preparing, and participating in a proceeding
599	599	under this chapter only after commission review is conducted in
600	600	accordance with Subchapter C or D, Chapter 36.
601	601	SECTION 5. Section 37.051, Utilities Code, is amended by
602	602	adding Subsection (d) to read as follows:
603	603	(d) Notwithstanding any other provision of this title, the
604	604	commission may issue multiple certificates to serve an area in
605	605	which customer choice was introduced before January 1, 2010. On
606	606	application, the commission shall issue a certificate to a retail
607	607	electric provider authorizing the provider to continue to provide
608	608	retail electric service in any area in which it was providing that
609	609	service on December 21, 2009. After July 1, 2010, only retail
610	610	electric providers certificated to serve an area in which customer
611	611	choice was introduced before January 1, 2010, may continue to serve
612	612	that area.
613	613	SECTION 6. Section 40.004, Utilities Code, is amended to
614	614	read as follows:
615	615	Sec. 40.004. JURISDICTION OF COMMISSION. Except as
616	616	specifically otherwise provided in this chapter, the commission has
617	617	jurisdiction over municipally owned utilities only for the
618	618	following purposes:
619	619	(1) to regulate wholesale transmission rates and
620	620	service, including terms of access, to the extent provided by
621	621	Subchapter A, Chapter 35;
622	622	(2) to regulate certification of retail service areas
623	623	to the extent provided by Chapter 37;
624	624	(3) to regulate rates on appeal under Subchapters D
625	625	and E, Chapter 33[, subject to Section 40.051(c)]; and
626	626	(4) [to establish a code of conduct as provided by
627	627	Section 39.157(e) applicable to anticompetitive activities and to
628	628	affiliate activities limited to structurally unbundled affiliates
629	629	of municipally owned utilities, subject to Section 40.054;
630	630	[(5) to establish terms and conditions for open access
631	631	to transmission and distribution facilities for municipally owned
632	632	utilities providing customer choice, as provided by Section 39.203;
633	633	[(6) to require collection of the nonbypassable fee
634	634	established under Section 39.903(b) and to administer the renewable
635	635	energy credits program under Section 39.904(b) and the natural gas
636	636	energy credits program under Section 39.9044(b); and
637	637	[(7)] to require reports of municipally owned utility
638	638	operations only to the extent necessary to[:
639	639	[(A)] enable the commission to determine the
640	640	aggregate load and energy requirements of the state and the
641	641	resources available to serve that load[; or
642	642	[(B) enable the commission to determine
643	643	information relating to market power as provided by Section
644	644	39.155].
645	645	SECTION 7. Section 40.104, Utilities Code, is amended to
646	646	read as follows:
647	647	Sec. 40.104. TAX-EXEMPT STATUS. Nothing in this subtitle
648	648	may impair the tax-exempt status of municipalities, electric
649	649	cooperatives, or river authorities, nor shall anything in this
650	650	subtitle compel any municipality, electric cooperative, or river
651	651	authority to use its facilities in a manner that violates any
652	652	contractual provisions, bond covenants, or other restrictions
653	653	applicable to facilities financed by tax-exempt debt.
654	654	[Notwithstanding any other provision of law, the decision to
655	655	participate in customer choice by the adoption of a resolution in
656	656	accordance with Section 40.051(b) is irrevocable.]
657	657	SECTION 8. Section 41.004, Utilities Code, is amended to
658	658	read as follows:
659	659	Sec. 41.004. JURISDICTION OF COMMISSION. Except as
660	660	specifically provided otherwise in this chapter, the commission has
661	661	jurisdiction over electric cooperatives only as follows:
662	662	(1) to regulate wholesale transmission rates and
663	663	service, including terms of access, to the extent provided in
664	664	Subchapter A, Chapter 35;
665	665	(2) to regulate certification to the extent provided
666	666	in Chapter 37;
667	667	(3) to establish a code of conduct as provided in
668	668	Section 39.157(e) [subject to Section 41.054]; and
669	669	(4) [to establish terms and conditions, but not rates,
670	670	for open access to distribution facilities for electric
671	671	cooperatives providing customer choice, as provided in Section
672	672	39.203; and
673	673	[(5)] to require reports of electric cooperative
674	674	operations only to the extent necessary to:
675	675	(A) ensure the public safety;
676	676	(B) enable the commission to satisfy its
677	677	responsibilities relating to electric cooperatives under this
678	678	chapter; or
679	679	(C) enable the commission to determine the
680	680	aggregate electric load and energy requirements in the state and
681	681	the resources available to serve that load[; or
682	682	[(D) enable the commission to determine
683	683	information relating to market power as provided in Section
684	684	39.155].
685	685	SECTION 9. Section 41.055, Utilities Code, is amended to
686	686	read as follows:
687	687	Sec. 41.055. JURISDICTION OF BOARD OF DIRECTORS. A board
688	688	of directors has exclusive jurisdiction to:
689	689	(1) set all terms of access, conditions, and rates
690	690	applicable to services provided by the electric cooperative,
691	691	[except as provided by Sections 41.054 and 41.056,] including
692	692	nondiscriminatory and comparable rates for distribution but
693	693	excluding wholesale transmission rates, terms of access, and
694	694	conditions for wholesale transmission service set by the commission
695	695	under Subchapter A, Chapter 35, provided that the rates for
696	696	distribution established by the electric cooperative shall be
697	697	comparable to the distribution rates that apply to the electric
698	698	cooperative and its subsidiaries;
699	699	(2) [determine whether to unbundle any energy-related
700	700	activities and, if the board of directors chooses to unbundle,
701	701	whether to do so structurally or functionally;
702	702	[(3) reasonably determine the amount of the electric
703	703	cooperative's stranded investment;
704	704	[(4) establish nondiscriminatory transition charges
705	705	reasonably designed to recover the stranded investment over an
706	706	appropriate period of time;
707	707	[(5) determine the extent to which the electric
708	708	cooperative will provide various customer services, including
709	709	nonelectric services, or accept the services from other providers;
710	710	[(6)] manage and operate the electric cooperative's
711	711	utility systems, including exercise of control over resource
712	712	acquisition and any related expansion programs;
713	713	(3) [(7)] establish and enforce service quality
714	714	standards, reliability standards, and consumer safeguards designed
715	715	to protect retail electric customers;
716	716	(4) [(8) determine whether a base rate reduction is
717	717	appropriate for the electric cooperative;
718	718	[(9)] determine any other utility matters that the
719	719	board of directors believes should be included;
720	720	(5) [(10)] sell electric energy and capacity at
721	721	wholesale[, regardless of whether the electric cooperative
722	722	participates in customer choice;
723	723	[(11) determine the extent to which the electric
724	724	cooperative offers energy efficiency programs and how the programs
725	725	are administered by the electric cooperative]; and
726	726	(6) [(12)] make any other decisions affecting the
727	727	electric cooperative's method of conducting business that are not
728	728	inconsistent with the provisions of this chapter.
729	729	SECTION 10. Sections 41.061(a), (c), and (e), Utilities
730	730	Code, are amended to read as follows:
731	731	(a) This section shall apply to retail rates of an electric
732	732	cooperative [that has not adopted customer choice and to the retail
733	733	delivery rates of an electric cooperative that has adopted customer
734	734	choice]. This section may not apply to rates for[:
735	735	[(1) sales of electric energy by an electric
736	736	cooperative that has adopted customer choice; or
737	737	[(2)] wholesale sales of electric energy.
738	738	(c) An electric cooperative may implement the proposed
739	739	rates on completion of the requirements under Subsection (b), and
740	740	those rates shall remain in effect until changed by the electric
741	741	cooperative as provided by this section [or, for rates other than
742	742	retail delivery rates, until this section is no longer applicable
743	743	because the electric cooperative adopts customer choice].
744	744	(e) Retail rates set by an electric cooperative [that has
745	745	not adopted customer choice and retail delivery rates set by an
746	746	electric cooperative that has adopted customer choice] shall be
747	747	just and reasonable, not unreasonably preferential, prejudicial,
748	748	or discriminatory; provided, however, if the customer agrees, an
749	749	electric cooperative may charge a market-based rate to customers
750	750	who have energy supply options if rates are not increased for other
751	751	customers as a result.
752	752	SECTION 11. Not later than February 1, 2010, a retail
753	753	electric provider that wants to continue to provide retail electric
754	754	service in ERCOT shall file with the Public Utility Commission of
755	755	Texas:
756	756	(1) an application for a certificate of convenience
757	757	and necessity under Section 37.051(d), Utilities Code, as added by
758	758	this Act; and
759	759	(2) a tariff that complies with Section 32.101,
760	760	Utilities Code.
761	761	SECTION 12. This Act does not affect bonds or other
762	762	indebtedness issued before the effective date of this Act. Bonds or
763	763	other indebtedness issued before the effective date of this Act are
764	764	governed by the law in effect when the bonds or other indebtedness
765	765	was issued, and that law is continued in effect for that purpose.
766	766	SECTION 13. This Act takes effect January 1, 2010.