Texas 2009 - 81st Regular

Texas Senate Bill SB1480 Compare Versions

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

Old	New	Differences
1	1	81R14462 TRH-F
2	2	By: Davis, Wendy S.B. No. 1480
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to regulation of electric generation capacity ownership in
8	8	the electric power market.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Sections 39.152(a) and (d), Utilities Code, are
11	11	amended to read as follows:
12	12	(a) The commission shall certify a power region if:
13	13	(1) a sufficient number of interconnected utilities in
14	14	the power region fall under the operational control of an
15	15	independent organization as described by Section 39.151;
16	16	(2) the power region has a generally applicable tariff
17	17	that guarantees open and nondiscriminatory access for all users to
18	18	transmission and distribution facilities in the power region as
19	19	provided by Section 39.203; and
20	20	(3) no person owns, controls, or owns and controls in
21	21	any combination more than 20 percent of the installed generation
22	22	capacity located in or capable of delivering electricity to a power
23	23	region, as determined according to Section 39.154.
24	24	(d) For a power region outside of ERCOT, a power generation
25	25	company that is affiliated with an electric utility may elect to
26	26	demonstrate that it meets the requirements of Subsection (a)(3) by
27	27	showing that it does not own, control, or own and control in any
28	28	combination more than 20 percent of the installed capacity in a
29	29	geographic market that includes the power region, using the
30	30	guidelines, standards, and methods adopted by the Federal Energy
31	31	Regulatory Commission.
32	32	SECTION 2. Section 39.153, Utilities Code, is amended by
33	33	adding Subsection (a-1) and amending Subsections (e) and (f) to
34	34	read as follows:
35	35	(a-1) Not later than September 30, 2010, each electric
36	36	utility subject to this section shall sell at auction or otherwise
37	37	divest any additional entitlements to the utility's jurisdictional
38	38	installed generation capacity necessary to ensure that the electric
39	39	utility does not control more than 20 percent of the installed
40	40	generation capacity:
41	41	(1) in ERCOT;
42	42	(2) in an ERCOT zonal boundary; or
43	43	(3) in a functional market recognized by the
44	44	commission.
45	45	(e) The commission shall adopt rules by December 31, 2000,
46	46	that define the initial scope of the capacity entitlements to be
47	47	auctioned and not later than December 31, 2009, shall adopt
48	48	additional rules that define the scope of the auctions necessary to
49	49	comply with Subsection (a-1). Entitlements may be auctioned in
50	50	blocks of less than 15 percent. The rules shall state the minimum
51	51	amount of capacity that can be sold at auction as an entitlement.
52	52	At a minimum, the rules shall provide that the entitlements:
53	53	(1) may be sold and purchased in periods of not less
54	54	than one month nor more than four years;
55	55	(2) may be resold to any lawful purchaser, except for a
56	56	retail electric provider affiliated with the electric utility that
57	57	originally auctioned the entitlement;
58	58	(3) include no possessory interest in the unit from
59	59	which the power is produced;
60	60	(4) include no obligations of a possessory owner of an
61	61	interest in the unit from which the power is produced; and
62	62	(5) give the purchaser the right to designate the
63	63	dispatch of the entitlement, subject to planned outages, outages
64	64	beyond the control of the utility operating the unit, and other
65	65	considerations subject to the oversight of the applicable
66	66	independent organization.
67	67	(f) The commission shall adopt rules by December 31, 2000,
68	68	that prescribe the procedure for the auction of the entitlements as
69	69	required by Subsection (a). If necessary, the commission may adopt
70	70	additional rules that prescribe the procedure for the auction of
71	71	the entitlements as required by Subsection (a-1). The rules shall
72	72	include:
73	73	(1) a process for conducting the auction or auctions,
74	74	including who shall conduct it, how often it shall be conducted, and
75	75	how winning bidders shall be determined;
76	76	(2) a process for the electric utility to designate
77	77	which generation units or combination of units are offered for
78	78	auction;
79	79	(3) a provision for the utility to establish an
80	80	opening bid price based on the electric utility's expected cost,
81	81	with the commission prescribing the means for determining the
82	82	opening bid price, which may not include return on equity; and
83	83	(4) a provision that allows a bidder to specify the
84	84	magnitude and term of the entitlement, subject to the conditions
85	85	established in Subsection (e).
86	86	SECTION 3. Sections 39.154(a) and (c), Utilities Code, are
87	87	amended to read as follows:
88	88	(a) Beginning on the date of introduction of customer
89	89	choice, a power generation company may not own, [and] control, or
90	90	own and control in any combination more than 20 percent of the
91	91	installed generation capacity located in, or capable of delivering
92	92	electricity to, a power region, zone, or functional market
93	93	recognized by the commission in the power region.
94	94	(c) In determining the percentage shares of installed
95	95	generation capacity under this section, the commission shall
96	96	combine capacity owned or [and] controlled by a power generation
97	97	company and any entity that is affiliated with that power
98	98	generation company within the power region, zone, or functional
99	99	market recognized by the commission in the power region, reduced by
100	100	the installed generation capacity of those facilities that are made
101	101	subject to capacity auctions under Sections 39.153(a) and (d).
102	102	SECTION 4. Section 39.155(a), Utilities Code, is amended to
103	103	read as follows:
104	104	(a) Each person, municipally owned utility, electric
105	105	cooperative, and river authority that owns or controls generation
106	106	facilities and offers electricity for sale in this state shall
107	107	report to the commission its installed generation capacity, the
108	108	total amount of capacity available for sale to others, the total
109	109	amount of capacity under contract to others, the total amount of
110	110	capacity dedicated to its own use, its annual wholesale power sales
111	111	in the state, its annual retail power sales in the state, and any
112	112	other information necessary for the commission to assess market
113	113	power or the development of a competitive retail market in the
114	114	state. The commission shall by rule prescribe the nature and detail
115	115	of the reporting requirements and shall administer those reporting
116	116	requirements in a manner that ensures the confidentiality of
117	117	competitively sensitive information.
118	118	SECTION 5. Sections 39.156(a), (b), and (g), Utilities
119	119	Code, are amended to read as follows:
120	120	(a) In this section, "market power mitigation plan" or
121	121	"plan" means a written proposal by an electric utility or a power
122	122	generation company for reducing its ownership or [and] control of
123	123	installed generation capacity as required by Section 39.154.
124	124	(b) An electric utility or power generation company owning,
125	125	controlling, or owning and controlling in any combination more than
126	126	20 percent of the generation capacity located in, or capable of
127	127	delivering electricity to, a power region, zone, or functional
128	128	market recognized by the commission in the power region shall file a
129	129	market power mitigation plan with the commission not later than the
130	130	90th day after the date the electric utility's or power generation
131	131	company's generation capacity exceeds the 20 percent limitation
132	132	under this subsection [December 1, 2000].
133	133	(g) In reaching its determination under Subsection (f), the
134	134	commission shall consider:
135	135	(1) the degree to which the electric utility's or power
136	136	generation company's stranded costs, if any, are minimized;
137	137	(2) whether on disposition of the generation assets
138	138	the reasonable value is likely to be received;
139	139	(3) the effect of the plan on the electric utility's or
140	140	power generation company's federal income taxes;
141	141	(4) the effect of the plan on current and potential
142	142	competitors in the generation market; [and]
143	143	(5) whether the plan is consistent with the public
144	144	interest;
145	145	(6) the ownership of generation resources in a zone;
146	146	(7) the control of generation through the use of
147	147	contracts between affiliated retail electric providers and
148	148	independent power producers; and
149	149	(8) the emissions credits owned or controlled by an
150	150	electric utility or power generation company in a nonattainment
151	151	area for national ambient air quality standards.
152	152	SECTION 6. Section 39.157(a), Utilities Code, is amended to
153	153	read as follows:
154	154	(a) The commission shall monitor market power associated
155	155	with the generation, transmission, distribution, and sale of
156	156	electricity in this state. On a finding that market power abuses or
157	157	other violations of this section are occurring, the commission
158	158	shall require reasonable mitigation of the market power by ordering
159	159	the construction of additional transmission or distribution
160	160	facilities, by seeking an injunction or civil penalties as
161	161	necessary to eliminate or to remedy the market power abuse or
162	162	violation as authorized by Chapter 15, by imposing an
163	163	administrative penalty as authorized by Chapter 15, or by
164	164	suspending, revoking, or amending a certificate or registration as
165	165	authorized by Section 39.356. The commission shall allow affected
166	166	customers, including political subdivisions, retail electric
167	167	providers, and commercial power users to participate in an
168	168	enforcement proceeding that alleges market power abuse or
169	169	manipulation of the wholesale market. The commission shall order
170	170	refunds be made to end users adversely impacted by a finding of
171	171	market power abuse or manipulation of the wholesale market. A
172	172	person may seek a remedy in any appropriate forum, regardless of
173	173	whether the commission takes action regarding an allegation of
174	174	market power abuse or manipulation of a wholesale market by an
175	175	electric utility or power generation company. An electric utility
176	176	or power generation company may not use the filed rate doctrine as a
177	177	defense to a suit by a private party that alleges market power abuse
178	178	or manipulation of the wholesale market. Section 15.024(c) does
179	179	not apply to an administrative penalty imposed under this section.
180	180	For purposes of this subchapter, market power abuses are practices
181	181	by persons possessing market power that are unreasonably
182	182	discriminatory or tend to unreasonably restrict, impair, or reduce
183	183	the level of competition, including practices that tie unregulated
184	184	products or services to regulated products or services or
185	185	unreasonably discriminate in the provision of regulated services.
186	186	For purposes of this section, "market power abuses" include
187	187	predatory pricing, withholding of production, precluding entry,
188	188	and collusion. A violation of the code of conduct provided by
189	189	Subsection (d) that materially impairs the ability of a person to
190	190	compete in a competitive market shall be deemed to be an abuse of
191	191	market power. The possession of a high market share in a market
192	192	open to competition may not, of itself, be deemed to be an abuse of
193	193	market power; however, this sentence shall not affect the
194	194	application of state and federal antitrust laws. The possession of
195	195	a low market share within a market open to competition does not, of
196	196	itself, preclude a finding that an investor-owned generator engaged
197	197	in an abuse of market power.
198	198	SECTION 7. Section 39.407(a), Utilities Code, is amended to
199	199	read as follows:
200	200	(a) If an electric utility chooses on or after January 1,
201	201	2007, to participate in customer choice, the commission may not
202	202	authorize customer choice until the applicable power region has
203	203	been certified as a qualifying power region under Section
204	204	39.152(a). Except as otherwise provided by this subsection, the
205	205	commission shall certify that the requirements of Section
206	206	39.152(a)(3) are met for electric utilities subject to this
207	207	subchapter only upon a finding that the total capacity owned,
208	208	controlled, or owned and controlled in any combination by each such
209	209	electric utility and its affiliates does not exceed 20 percent of
210	210	the total installed generation capacity within the constrained
211	211	geographic region served by each such electric utility plus the
212	212	total available transmission capacity capable of delivering firm
213	213	power and energy to that constrained geographic region. Not later
214	214	than May 1, 2002, each electric utility subject to this subchapter
215	215	shall submit to the electric utility restructuring legislative
216	216	oversight committee an analysis of the needed transmission
217	217	facilities necessary to make the electric utility's service area
218	218	transmission capability comparable to areas within the ERCOT power
219	219	region. On or after September 1, 2003, each electric utility
220	220	subject to this subchapter shall file the utility's plans to
221	221	develop the utility's transmission interconnections with the
222	222	utility's power region or other adjacent power regions. The
223	223	commission shall review the plan and not later than the 180th day
224	224	after the date the plan is filed, determine the additional
225	225	transmission facilities necessary to provide access to power and
226	226	energy that is comparable to the access provided in areas within the
227	227	ERCOT power region; provided, however, that if a hearing is
228	228	requested by any party to the proceeding, the 180-day deadline will
229	229	be extended one day for each day of hearings. The commission shall,
230	230	as a part of the commission's approval of the plan, approve a rate
231	231	rider mechanism for the recovery of the incremental costs of those
232	232	facilities after the facilities are completed and in-service. A
233	233	finding of need under this subsection shall meet the requirements
234	234	of Sections 37.056(c)(1), (2), and (4)(E). The commission may
235	235	certify that the requirements of Section 39.152(a)(3) are met for
236	236	electric utilities subject to this subchapter if the commission
237	237	finds that:
238	238	(1) each such utility has sufficient transmission
239	239	facilities to provide customers access to power and energy from
240	240	capacity controlled by suppliers not affiliated with the incumbent
241	241	utility that is comparable to the access to power and energy from
242	242	capacity controlled by suppliers not affiliated with the incumbent
243	243	utilities in areas of the ERCOT power region; and
244	244	(2) the total capacity owned, controlled, or owned and
245	245	controlled in any combination by each such electric utility and its
246	246	affiliates does not exceed 20 percent of the total installed
247	247	generation capacity within the power region.
248	248	SECTION 8. Section 39.453(b), Utilities Code, is amended to
249	249	read as follows:
250	250	(b) The commission shall certify that the requirement of
251	251	Section 39.152(a)(3) is met for an electric utility subject to this
252	252	subchapter only if the commission finds that the total capacity
253	253	owned, controlled, or owned and controlled in any combination by
254	254	the electric utility and the utility's affiliates does not exceed
255	255	20 percent of the total installed generation capacity within the
256	256	power region of that utility.
257	257	SECTION 9. Sections 39.153(b) and 39.154(e), Utilities
258	258	Code, are repealed.
259	259	SECTION 10. This Act takes effect immediately if it
260	260	receives a vote of two-thirds of all the members elected to each
261	261	house, as provided by Section 39, Article III, Texas Constitution.
262	262	If this Act does not receive the vote necessary for immediate
263	263	effect, this Act takes effect September 1, 2009.