S.B. No. 1693
AN ACT
relating to periodic rate adjustments by electric utilities.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter E, Chapter 36, Utilities Code, is
amended by adding Section 36.210 to read as follows:
Sec. 36.210. PERIODIC RATE ADJUSTMENTS. (a) The
commission or a regulatory authority, on the petition of an
electric utility, may approve a tariff or rate schedule in which a
nonfuel rate may be periodically adjusted upward or downward, based
on changes in the parts of the utility's invested capital, as
described by Section 36.053, that are categorized as distribution
plant, distribution-related intangible plant, and
distribution-related communication equipment and networks in
accordance with commission rules adopted after consideration of the
uniform system of accounts prescribed by the Federal Energy
Regulatory Commission. A periodic rate adjustment must:
(1) be approved or denied in accordance with an
expedited procedure that:
(A) provides for appropriate updates of
information;
(B) allows for participation by the office and
affected parties; and
(C) extends for not less than 60 days;
(2) take into account changes in the number of an
electric utility's customers and the effects, on a
weather-normalized basis, that energy consumption and energy
demand have on the amount of revenue recovered through the electric
utility's base rates;
(3) be consistent with the manner in which costs for
invested capital described by this subsection were allocated to
each rate class, as approved by the commission, in an electric
utility's most recent base rate statement of intent proceeding with
changes to residential and commercial class rates reflected in
volumetric charges to the extent that residential and commercial
class rates are collected in that manner based on the electric
utility's most recent base rate statement of intent proceeding;
(4) not diminish the ability of the commission or a
regulatory authority, on its own motion or on complaint by an
affected person as provided by Subchapter D, after reasonable
notice and hearing, to change the existing rates of an electric
utility for a service after finding that the rates are unreasonable
or in violation of law;
(5) be applied by an electric utility on a system-wide
basis; and
(6) be supported by the sworn statement of an
appropriate employee of the electric utility that affirms that:
(A) the filing is in compliance with the
provisions of the tariff or rate schedule; and
(B) the filing is true and correct to the best of
the employee's knowledge, information, and belief.
(b) An electric utility in the ERCOT power region, or an
unbundled electric utility outside the ERCOT power region in whose
service area retail competition is available, that requests a
periodic rate adjustment under this section shall:
(1) except as provided by Subsection (f)(3) and to the
extent possible, implement simultaneously all nonfuel rates to be
adjusted in a 12-month period that are charged by the utility to
retail electric providers; and
(2) provide notice to retail electric providers of the
approved rates not later than the 45th day before the date the rates
take effect.
(c) A periodic rate adjustment approved under this section
may not be used to adjust the portion of a nonfuel rate relating to
the generation of electricity.
(d) An electric utility may adjust the utility's rates under
this section not more than once per year and not more than four
times between comprehensive base rate proceedings.
(e) A periodic rate adjustment approved under this section
may not include indirect corporate costs or capitalized operations
and maintenance expenses.
(f) Nothing in this section is intended to:
(1) conflict with a provision contained in a financing
order issued under Subchapter I of this chapter or Subchapter G or
J, Chapter 39;
(2) affect the limitation on the commission's
jurisdiction under Section 32.002;
(3) include in a periodic rate adjustment authorized
by this section costs adjusted under a transmission cost-of-service
adjustment approved under Section 35.004(d);
(4) limit the jurisdiction of a municipality over the
rates, operations, and services of an electric utility as provided
by Section 33.001;
(5) limit the ability of a municipality to obtain a
reimbursement under Section 33.023 for the reasonable cost of
services of a person engaged in an activity described by that
section; or
(6) prevent the commission from:
(A) reviewing the investment costs included in a
periodic rate adjustment or in the following comprehensive base
rate proceeding to determine whether the costs were prudent,
reasonable, and necessary; or
(B) refunding to customers any amount improperly
recovered through the periodic rate adjustments, with appropriate
carrying costs.
(g) The commission shall adopt rules necessary to implement
this section. The rules must provide for:
(1) a procedure by which a tariff or rate schedule is
to be reviewed and approved;
(2) filing requirements and discovery consistent with
the expedited procedure described by Subsection (a)(1);
(3) an earnings monitoring report that allows the
commission or regulatory authority to reasonably determine whether
a utility is earning in excess of the utility's allowed return on
investment as normalized for weather;
(4) denial of the electric utility's filing if the
electric utility is earning more than the utility's authorized rate
of return on investment, on a weather-normalized basis, at the time
the periodic rate adjustment request is filed; and
(5) a mechanism by which the commission may refund
customers any amounts determined to be improperly recovered through
a periodic rate adjustment, including any interest on the amounts.
(h) The commission shall undertake a study and conduct a
report analyzing any periodic rate adjustment established under
this section. The study shall be available for the legislature's
review by January 31, 2017, so that the legislature may properly be
informed as to the need to continue the commission's authority to
allow periodic rate adjustments. The report shall contain but
shall not be limited to:
(1) an analysis of all periodic rate adjustments
approved by the commission;
(2) an analysis of the amounts in real dollars and
percentages of the approved amounts by the commission and the
effects on all classes of ratepayers;
(3) the costs savings, if any, realized by all parties
by utilizing periodic rate adjustment as opposed to ratemaking
proceedings;
(4) an analysis on distribution costs included in
periodic rate adjustments, and their appropriateness for inclusion
in periodic rate adjustments; and
(5) an analysis submitted by the office on the effects
of periodic rate adjustments.
(i) This section expires January 1, 2017.
SECTION 2. The Public Utility Commission of Texas shall
adopt rules as necessary to implement Section 36.210, Utilities
Code, as added by this Act, not later than the 120th day after the
effective date of this Act.
SECTION 3. 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, 2011.
______________________________ ______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 1693 passed the Senate on
April 26, 2011, by the following vote: Yeas 30, Nays 1; and that
the Senate concurred in House amendments on May 17, 2011, by the
following vote: Yeas 30, Nays 1.
______________________________
Secretary of the Senate
I hereby certify that S.B. No. 1693 passed the House, with
amendments, on May 10, 2011, by the following vote: Yeas 140,
Nays 3, one present not voting.
______________________________
Chief Clerk of the House
Approved:
______________________________
Date
______________________________
Governor