84R7275 JXC-F
By: Frullo H.B. No. 1535
A BILL TO BE ENTITLED
AN ACT
relating to rates of and certificates of convenience and necessity
for certain non-ERCOT electric utilities.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 36.209, Utilities Code, is amended to
read as follows:
Sec. 36.209. COST RECOVERY AND RATE ADJUSTMENT STANDARDS
AND PROCEDURES FOR [BY] CERTAIN NON-ERCOT UTILITIES [OF CERTAIN
TRANSMISSION COSTS]. (a) This section applies only to an electric
utility that operates solely outside of ERCOT [in areas of this
state included in the Southeastern Electric Reliability Council,
the Southwest Power Pool, or the Western Electricity Coordinating
Council and that owns or operates transmission facilities].
(b) The commission, after notice and opportunity for
hearing, shall [may] allow an electric utility to adjust its rates
to ensure timely recovery of the utility's [recover on an annual
basis its] reasonable and necessary costs [expenditures] for
transmission investment [infrastructure improvement costs] and
changes in wholesale transmission charges to the [electric] utility
under a tariff approved by a federal regulatory authority, to the
extent that the costs or charges have not otherwise been recovered.
The commission may allow the electric utility to recover only the
costs and charges allocable to retail customers in the state and may
not allow the [electric] utility to over-recover costs or charges.
The standards and procedures described in Subsections (c)-(e)
exclusively govern a rate adjustment described by this subsection.
(c) An electric utility may apply to adjust the utility's
transmission rates on an interim basis not more than twice each
calendar year to reflect changes in the utility's invested capital
and wholesale transmission charges since the test year in the
utility's most recent base rate case before the commission. An
application is eligible for informal disposition under commission
rules and Section 2001.056, Government Code. If the requirements
for informal disposition are met, the presiding officer shall issue
a notice of approval not later than the 60th day after the date a
materially sufficient application is filed, unless good cause
exists to extend the deadline or the presiding officer determines
that the proceeding should be considered by the commission.
(d) If an electric utility elects to adjust the utility's
transmission rates under this section, the new rates must reflect
the addition and retirement of transmission facilities, including
associated depreciation, federal income tax and other associated
taxes, and the commission-authorized rate of return on the
facilities. The commission shall use load growth during this
process only for the purpose of establishing billing determinants
to set new rates.
(e) An adjustment of an electric utility's transmission
rates under this section is subject to reconciliation at the next
complete review of the utility's transmission cost of service. As
part of the complete review, the commission shall review the costs
of the interim transmission plant additions to determine if the
costs were reasonable and necessary. Any amounts resulting from an
adjustment, including amounts associated with capital investment
expenditures or transmission charges, that are found to have been
unreasonable or unnecessary, plus the corresponding return and
taxes, shall be refunded with carrying costs. For the period
beginning on the date the over-recovery is determined to have begun
and ending on the effective date of the electric utility's rates set
in the complete review of the utility's transmission cost of
service, carrying costs shall be calculated using the same rate of
return that was applied to the transmission investments included in
the adjustment. For the time period that begins on the effective
date of the electric utility's rates set in the complete review of
the utility's transmission cost of service, carrying costs shall be
calculated using the utility's rate of return authorized in the
complete review.
(f) In establishing the base rates of an electric utility
under Subchapter C, or rates governed by Subsections (b)-(e) or by
Section 36.204, 36.205, or 36.210, the regulatory authority
otherwise provided with jurisdiction over those rate proceedings
shall determine the utility's revenue requirement based on, at the
election of the utility:
(1) information submitted for a test year or other
applicable historical period for rate proceedings described by this
subsection; or
(2) updated information that reflects actual or
estimated information for a period ending not later than the
earlier of:
(A) the last day of the seventh month after the
end of the test year or other applicable historical period for rate
proceedings described by this subsection; or
(B) the 35th day after the date the applicable
rate proceeding is filed.
(g) An electric utility that elects to update information as
authorized by Subsection (f) is not precluded from proposing other
known and measurable changes to the utility's historical rate
information. If the utility proposes a known and measurable change
to the information, the utility must provide a reasonable estimate
or projection of the annualized effects of the change on the
utility's operating expenses, invested capital, and revenues
during the first 12 months the rates are expected to be in effect.
For the purposes of this subsection, a known and measurable change
is:
(1) anticipated to occur not later than during the
first 12 months the rates are expected to be in effect;
(2) a change in the level of an electric utility's
operating expenses, invested capital, or revenues; and
(3) a change whose existence is known, is reflected in
a reasonable budget estimate, or is otherwise the subject of a
reasonable estimate or projection.
(h) In a rate proceeding authorized by this subchapter or
Subchapter C, notwithstanding Section 36.109(a), the regulatory
authority with jurisdiction shall establish temporary rates on the
application of the electric utility at a level that is 70 percent of
the utility's requested increase, effective for consumption on and
after the 35th day after the date the utility files to initiate the
rate proceeding. The temporary rates shall remain in effect during
any applicable suspension period until final rates become
effective. On issuance of a final order that establishes new rates:
(1) money collected under the temporary rates in
excess of the rate finally ordered is subject to refund; and
(2) the electric utility may surcharge bills to
recover the amount by which the money collected under the temporary
rates is less than the money that would have been collected under
the rate finally ordered.
(i) If the electric utility does not apply for temporary
rates under Subsection (h), the final rate set in a rate proceeding
under this subchapter or Subchapter C shall be made effective for
consumption on and after the 35th day after the date the utility
filed to initiate the rate proceeding. The regulatory authority
shall:
(1) require the electric utility to refund to
customers money collected in excess of the rate finally ordered on
or after the 35th day after the date the utility filed to initiate
the rate proceeding; or
(2) authorize the electric utility to surcharge bills
to recover the amount by which the money collected on or after the
35th day after the date the utility filed to initiate the rate
proceeding is less than the money that would have been collected
under the rate finally ordered.
(j) An electric utility is entitled to file an application
with the commission to recover, through a rate rider mechanism, a
return of and on the prudent and reasonable capital expenditures,
the reasonable and necessary operation and maintenance expenses,
and the taxes associated with either the acquisition of an existing
generating facility or the construction of a new generating
facility. A rate proceeding under Subchapter C is not required to
establish or adjust the rider. In a proceeding brought under this
subsection to establish the initial rider, the commission shall
issue a final order before the 181st day after the date the electric
utility files the application with the commission. If the
commission does not issue a final order before that date, the
application is considered approved. An approved rider becomes
effective on the date the generating facility begins to provide
service to the electric utility's retail customers in this state,
and continues in effect until the effective date of new base rates
that allow the utility to recover the costs of the new generating
facility from the utility's retail customers in this state. The
electric utility may use both actual historical cost information
and reasonable cost estimates as the basis for recovery under the
initial rider. The rider must use the return on equity most
recently approved by the commission in the electric utility's base
rate proceedings.
(k) In the case of the acquisition of an existing generating
facility, an electric utility may file the application for approval
of a rider described by Subsection (j) in the same proceeding in
which it seeks issuance of a certificate of convenience and
necessity for the facility under Chapter 37. Notwithstanding
Section 36.053, the utility's recoverable invested capital shall be
based on the purchase price for the newly acquired facility. In the
case of a newly constructed generating facility, the utility may
file its application for approval of a rider described by
Subsection (j) not earlier than 180 days before the expected
commercial operation date of the new facility.
(l) Once established, a rider described by Subsection (j) is
subject to annual adjustment, so that the rider reflects historical
costs from the most recent 12-month period available before the
filing of an application to make the adjustment. An adjustment
under the rider takes effect as a temporary rate, subject to refund
based on the final commission decision, not later than the 35th day
after the date of filing of an application to make the adjustment.
The commission shall take final action on an application to make an
adjustment not later than the 90th day after the date of filing. If
the commission does not take final action before that date, the
application is considered approved.
(m) A rider described by Subsection (j) is subject to a
periodic true-up. A true-up must cover at least a 12-month period.
In a true-up proceeding, the electric utility shall reconcile the
revenues recovered by the utility under the rider with the actual
prudent, reasonable, and necessary level of costs, and the rider
shall be further adjusted as necessary to reflect the outcome of the
reconciliation.
SECTION 2. Subchapter B, Chapter 37, Utilities Code, is
amended by adding Section 37.058 to read as follows:
Sec. 37.058. CERTIFICATE AND DETERMINATION ISSUED TO
CERTAIN NON-ERCOT UTILITIES FOR GENERATING FACILITY. (a) This
section applies only to an electric utility that operates solely
outside of ERCOT.
(b) An electric utility may file with the commission a
request that the commission:
(1) grant a certificate for an electric generating
facility;
(2) make a public interest determination for the
purchase of an existing electric generating facility under Section
14.101; or
(3) both grant a certificate and make a determination.
(c) The commission may grant a request described by
Subsection (b).
(d) Notwithstanding any other law, in a proceeding
involving the purchase of an existing electric generating facility,
the commission shall issue a final order on a certificate for the
facility or making a determination on the facility required by
Section 14.101, as applicable, not later than the 181st day after
the date a request for the certificate or determination is filed
with the commission under Subsection (b). If the commission does
not issue a final order before that date, the application is
considered approved. For generating facilities granted a
certificate under this subsection, notwithstanding Section 36.053,
the utility's recoverable invested capital included in rates shall
be based on the purchase price for the newly acquired facility.
(e) Notwithstanding any other law, in a proceeding
involving a newly constructed generating facility, the commission
shall issue a final order on a certificate for the facility not
later than the 366th day after the date a request for the
certificate is filed with the commission under Subsection (b). If
the commission does not issue a final order before that date, the
application is considered approved.
SECTION 3. The changes in law made by this Act apply only to
a proceeding before the Public Utility Commission of Texas or other
regulatory authority described by Section 11.003, Utilities Code,
that commences on or after the effective date of this Act. A
proceeding before the Public Utility Commission of Texas or other
regulatory authority described by Section 11.003, Utilities Code,
that commenced before the effective date of this Act is governed by
the law in effect on the date the proceeding commenced, and that law
is continued in effect for that purpose.
SECTION 4. 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, 2015.