81R10167 TJS-D
By: Hughes, Frost, Merritt, Homer, Hopson, H.B. No. 870
et al.
Substitute the following for H.B. No. 870:
By: Solomons C.S.H.B. No. 870
A BILL TO BE ENTITLED
AN ACT
relating to transition to competition in the Southwestern Electric
Power Company service area.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 39, Utilities Code, is amended by adding
Subchapter K to read as follows:
SUBCHAPTER K. TRANSITION TO COMPETITION FOR CERTAIN
AREAS OUTSIDE OF ERCOT
Sec. 39.501. APPLICABILITY. (a) This subchapter applies
to an investor-owned electric utility:
(1) that is operating solely outside of ERCOT in areas
of this state that were included in the Southwest Power Pool on
January 1, 2008;
(2) that was not affiliated with the Southeastern
Electric Reliability Council on January 1, 2008; and
(3) to which Subchapter I does not apply.
(b) The legislature finds that an electric utility subject
to this subchapter is unable at this time to offer fair competition
and reliable service to all retail customer classes in the area
served by the utility. As a result, the introduction of retail
competition for such an electric utility is delayed until fair
competition and reliable service are available to all retail
customer classes as determined under this subchapter.
Sec. 39.502. COST-OF-SERVICE REGULATION. (a) Until the
date on which an electric utility subject to this subchapter is
authorized by the commission under Section 39.503(f) to implement
retail customer choice, the rates of the utility are subject to
regulation under Chapter 36.
(b) Until the date on which an electric utility subject to
this subchapter implements customer choice, the provisions of this
chapter, other than this subchapter and Sections 39.904 and 39.905,
do not apply to that utility.
Sec. 39.503. TRANSITION TO COMPETITION. (a) The events
prescribed by Subsections (b)-(f) shall be followed to introduce
retail competition in the service area of an electric utility
subject to this subchapter. The commission may modify the sequence
of events required by Subsections (b)-(e), but not the substance of
the requirements. Full retail competition may not begin in the
service area of an electric utility subject to this subchapter
until all actions prescribed by those subsections are completed.
(b) The first stage for the transition to competition
consists of the following activities:
(1) approval of a regional transmission organization
by the Federal Energy Regulatory Commission for the power region
that includes the electric utility's service area and commencement
of independent operation of the transmission network under the
approved regional transmission organization;
(2) development of retail market protocols to
facilitate retail competition; and
(3) completion of an expedited proceeding to develop
non-bypassable delivery rates for the customer choice pilot project
to be implemented under Subsection (c)(1).
(c) The second stage for the transition to competition
consists of the following activities:
(1) initiation of the customer choice pilot project in
accordance with Section 39.104;
(2) development of a balancing energy market, a market
for ancillary services, and a market-based congestion management
system for the wholesale market in the power region in which the
regional transmission organization operates; and
(3) implementation of a seams agreement with adjacent
power regions to reduce barriers to entry and facilitate
competition.
(d) The third stage for the transition to competition
consists of the following activities:
(1) the electric utility filing with the commission:
(A) an application for business separation in
accordance with Section 39.051;
(B) an application for unbundled transmission
and distribution rates in accordance with Section 39.201;
(C) an application for certification of a
qualified power region in accordance with Section 39.152; and
(D) an application for price-to-beat rates in
accordance with Section 39.202;
(2) the commission:
(A) approving a business separation plan for the
utility;
(B) setting unbundled transmission and
distribution rates for the utility;
(C) certifying a qualified power region, which
includes conducting a formal evaluation of wholesale market power
in the region, in accordance with Section 39.152;
(D) setting price-to-beat rates for the utility;
and
(E) determining which competitive energy
services must be separated from regulated utility activities in
accordance with Section 39.051; and
(3) completion of the testing of retail and wholesale
systems, including those systems necessary for switching customers
to the retail electric provider of their choice and for settlement
of wholesale market transactions, by the regional transmission
organization, the registration agent, and market participants.
(e) The fourth stage for the transition to competition
consists of the following activities:
(1) commission evaluation of the results of the pilot
project;
(2) initiation by the electric utility of a capacity
auction in accordance with Section 39.153 at a time to be determined
by the commission; and
(3) separation by the utility of competitive energy
services from its regulated utility activities, in accordance with
the commission order approving the separation of competitive energy
services.
(f) The fifth stage for the transition to competition
consists of the following activities:
(1) evaluation by the commission of whether the
electric utility can offer fair competition and reliable service to
all retail customer classes in the area served by the utility, and:
(A) if the commission concludes that the electric
utility can offer fair competition and reliable service to all
retail customer classes in the area served by the utility, the
commission issuing an order initiating retail competition for the
utility; and
(B) if the commission determines that the
electric utility cannot offer fair competition and reliable service
to all retail customer classes in the area served by the utility,
the commission issuing an order further delaying retail competition
for the utility; and
(2) on the issuance of an order from the commission
initiating retail competition for the utility, completion by the
utility of the business separation and unbundling in accordance
with the commission order approving the unbundling.
SECTION 2. This Act takes effect September 1, 2009.