Texas Senate Bill SB365

Texas 2015 - 84th Regular

Caption

Relating to the methods of recovery of stranded environmental compliance costs by certain non-ERCOT electric utilities.

Impact

The proposed subchapter to the Texas Utilities Code outlines that electric utilities will be able to recover costs incurred from the retirement or idling of generating units as a result of existing or anticipated federal or state environmental regulations. This includes the right to recover capital expenditures that were previously invested to achieve compliance. By establishing a clear pathway for recovery through securitization, SB365 not only addresses the financial health of utilities but also aims to ensure that the compliance costs do not overly burden the ratepayers.

Summary

Senate Bill 365 focuses on the recovery of stranded environmental compliance costs by specific non-Electric Reliability Council of Texas (ERCOT) electric utilities. The legislation introduces a framework for these utilities to utilize securitization as a means to finance the recovery of costs related to environmental compliance that has become stranded due to regulatory changes. This approach aims to reduce the financial burden on utilities and, ultimately, help lower rates for consumers by allowing for a more efficient method of managing and recovering these costs.

Contention

One point of contention surrounding SB365 may arise from the implications of securitization on consumer charges. While the intent is to minimize carrying costs and make recovery more efficient, there are concerns that the approved transition charges could become a permanent fixture in utility bills. Legislative discussions reflect a tension between the need for financial recovery of utilities in response to regulatory pressures and the potential impact on customers' electricity rates. The bill aims to navigate these concerns by postulating a regulatory mechanism that allows for scrutiny and approval of these recoveries by the commission overseeing utility operations.