81R9100 TRH-F
By: Keffer H.B. No. 2782
A BILL TO BE ENTITLED
AN ACT
relating to regulation of electric generation capacity ownership in
the electric power market.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Sections 39.152(a) and (d), Utilities Code, are
amended to read as follows:
(a) The commission shall certify a power region if:
(1) a sufficient number of interconnected utilities in
the power region fall under the operational control of an
independent organization as described by Section 39.151;
(2) the power region has a generally applicable tariff
that guarantees open and nondiscriminatory access for all users to
transmission and distribution facilities in the power region as
provided by Section 39.203; and
(3) no person owns, controls, or owns and controls in
any combination more than 20 percent of the installed generation
capacity located in or capable of delivering electricity to a power
region, as determined according to Section 39.154.
(d) For a power region outside of ERCOT, a power generation
company that is affiliated with an electric utility may elect to
demonstrate that it meets the requirements of Subsection (a)(3) by
showing that it does not own, control, or own and control in any
combination more than 20 percent of the installed capacity in a
geographic market that includes the power region, using the
guidelines, standards, and methods adopted by the Federal Energy
Regulatory Commission.
SECTION 2. Section 39.153, Utilities Code, is amended by
adding Subsection (a-1) and amending Subsections (e) and (f) to
read as follows:
(a-1) Not later than September 30, 2010, each electric
utility subject to this section shall sell at auction or otherwise
divest any additional entitlements to the utility's jurisdictional
installed generation capacity necessary to ensure that the electric
utility does not control more than 20 percent of the installed
generation capacity:
(1) in ERCOT;
(2) in an ERCOT zonal boundary; or
(3) in a functional market recognized by the
commission.
(e) The commission shall adopt rules by December 31, 2000,
that define the initial scope of the capacity entitlements to be
auctioned and not later than December 31, 2009, shall adopt
additional rules that define the scope of the auctions necessary to
comply with Subsection (a-1). Entitlements may be auctioned in
blocks of less than 15 percent. The rules shall state the minimum
amount of capacity that can be sold at auction as an entitlement.
At a minimum, the rules shall provide that the entitlements:
(1) may be sold and purchased in periods of not less
than one month nor more than four years;
(2) may be resold to any lawful purchaser, except for a
retail electric provider affiliated with the electric utility that
originally auctioned the entitlement;
(3) include no possessory interest in the unit from
which the power is produced;
(4) include no obligations of a possessory owner of an
interest in the unit from which the power is produced; and
(5) give the purchaser the right to designate the
dispatch of the entitlement, subject to planned outages, outages
beyond the control of the utility operating the unit, and other
considerations subject to the oversight of the applicable
independent organization.
(f) The commission shall adopt rules by December 31, 2000,
that prescribe the procedure for the auction of the entitlements as
required by Subsection (a). If necessary, the commission may adopt
additional rules that prescribe the procedure for the auction of
the entitlements as required by Subsection (a-1). The rules shall
include:
(1) a process for conducting the auction or auctions,
including who shall conduct it, how often it shall be conducted, and
how winning bidders shall be determined;
(2) a process for the electric utility to designate
which generation units or combination of units are offered for
auction;
(3) a provision for the utility to establish an
opening bid price based on the electric utility's expected cost,
with the commission prescribing the means for determining the
opening bid price, which may not include return on equity; and
(4) a provision that allows a bidder to specify the
magnitude and term of the entitlement, subject to the conditions
established in Subsection (e).
SECTION 3. Sections 39.154(a) and (c), Utilities Code, are
amended to read as follows:
(a) Beginning on the date of introduction of customer
choice, a power generation company may not own, [and] control, or
own and control in any combination more than 20 percent of the
installed generation capacity located in, or capable of delivering
electricity to, a power region, zone, or functional market
recognized by the commission in the power region.
(c) In determining the percentage shares of installed
generation capacity under this section, the commission shall
combine capacity owned or [and] controlled by a power generation
company and any entity that is affiliated with that power
generation company within the power region, zone, or functional
market recognized by the commission in the power region, reduced by
the installed generation capacity of those facilities that are made
subject to capacity auctions under Sections 39.153(a) and (d).
SECTION 4. Section 39.155(a), Utilities Code, is amended to
read as follows:
(a) Each person, municipally owned utility, electric
cooperative, and river authority that owns or controls generation
facilities and offers electricity for sale in this state shall
report to the commission its installed generation capacity, the
total amount of capacity available for sale to others, the total
amount of capacity under contract to others, the total amount of
capacity dedicated to its own use, its annual wholesale power sales
in the state, its annual retail power sales in the state, and any
other information necessary for the commission to assess market
power or the development of a competitive retail market in the
state. The commission shall by rule prescribe the nature and detail
of the reporting requirements and shall administer those reporting
requirements in a manner that ensures the confidentiality of
competitively sensitive information.
SECTION 5. Sections 39.156(a), (b), and (g), Utilities
Code, are amended to read as follows:
(a) In this section, "market power mitigation plan" or
"plan" means a written proposal by an electric utility or a power
generation company for reducing its ownership or [and] control of
installed generation capacity as required by Section 39.154.
(b) An electric utility or power generation company owning,
controlling, or owning and controlling in any combination more than
20 percent of the generation capacity located in, or capable of
delivering electricity to, a power region, zone, or functional
market recognized by the commission in the power region shall file a
market power mitigation plan with the commission not later than the
90th day after the date the electric utility's or power generation
company's generation capacity exceeds the 20 percent limitation
under this subsection [December 1, 2000].
(g) In reaching its determination under Subsection (f), the
commission shall consider:
(1) the degree to which the electric utility's or power
generation company's stranded costs, if any, are minimized;
(2) whether on disposition of the generation assets
the reasonable value is likely to be received;
(3) the effect of the plan on the electric utility's or
power generation company's federal income taxes;
(4) the effect of the plan on current and potential
competitors in the generation market; [and]
(5) whether the plan is consistent with the public
interest;
(6) the ownership of generation resources in a zone;
(7) the control of generation through the use of
contracts between affiliated retail electric providers and
independent power producers; and
(8) the emissions credits owned or controlled by an
electric utility or power generation company in a nonattainment
area for national ambient air quality standards.
SECTION 6. Section 39.407(a), Utilities Code, is amended to
read as follows:
(a) If an electric utility chooses on or after January 1,
2007, to participate in customer choice, the commission may not
authorize customer choice until the applicable power region has
been certified as a qualifying power region under Section
39.152(a). Except as otherwise provided by this subsection, the
commission shall certify that the requirements of Section
39.152(a)(3) are met for electric utilities subject to this
subchapter only upon a finding that the total capacity owned,
controlled, or owned and controlled in any combination by each such
electric utility and its affiliates does not exceed 20 percent of
the total installed generation capacity within the constrained
geographic region served by each such electric utility plus the
total available transmission capacity capable of delivering firm
power and energy to that constrained geographic region. Not later
than May 1, 2002, each electric utility subject to this subchapter
shall submit to the electric utility restructuring legislative
oversight committee an analysis of the needed transmission
facilities necessary to make the electric utility's service area
transmission capability comparable to areas within the ERCOT power
region. On or after September 1, 2003, each electric utility
subject to this subchapter shall file the utility's plans to
develop the utility's transmission interconnections with the
utility's power region or other adjacent power regions. The
commission shall review the plan and not later than the 180th day
after the date the plan is filed, determine the additional
transmission facilities necessary to provide access to power and
energy that is comparable to the access provided in areas within the
ERCOT power region; provided, however, that if a hearing is
requested by any party to the proceeding, the 180-day deadline will
be extended one day for each day of hearings. The commission shall,
as a part of the commission's approval of the plan, approve a rate
rider mechanism for the recovery of the incremental costs of those
facilities after the facilities are completed and in-service. A
finding of need under this subsection shall meet the requirements
of Sections 37.056(c)(1), (2), and (4)(E). The commission may
certify that the requirements of Section 39.152(a)(3) are met for
electric utilities subject to this subchapter if the commission
finds that:
(1) each such utility has sufficient transmission
facilities to provide customers access to power and energy from
capacity controlled by suppliers not affiliated with the incumbent
utility that is comparable to the access to power and energy from
capacity controlled by suppliers not affiliated with the incumbent
utilities in areas of the ERCOT power region; and
(2) the total capacity owned, controlled, or owned and
controlled in any combination by each such electric utility and its
affiliates does not exceed 20 percent of the total installed
generation capacity within the power region.
SECTION 7. Section 39.453(b), Utilities Code, is amended to
read as follows:
(b) The commission shall certify that the requirement of
Section 39.152(a)(3) is met for an electric utility subject to this
subchapter only if the commission finds that the total capacity
owned, controlled, or owned and controlled in any combination by
the electric utility and the utility's affiliates does not exceed
20 percent of the total installed generation capacity within the
power region of that utility.
SECTION 8. Sections 39.153(b) and 39.154(e), Utilities
Code, are repealed.
SECTION 9. 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, 2009.