Texas 2021 - 87th Regular

Texas House Bill HB1520 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	H.B. No. 1520
	1	+	By: Paddie, et al. (Senate Sponsor - Hancock) H.B. No. 1520
	2	+	(In the Senate - Received from the House April 20, 2021;
	3	+	May 13, 2021, read first time and referred to Committee on Natural
	4	+	Resources & Economic Development; May 22, 2021, reported
	5	+	adversely, with favorable Committee Substitute by the following
	6	+	vote: Yeas 9, Nays 0; May 22, 2021, sent to printer.)
	7	+	Click here to see the committee vote
	8	+	COMMITTEE SUBSTITUTE FOR H.B. No. 1520 By: Hancock
2	9
3	10
	11	+	A BILL TO BE ENTITLED
4	12		AN ACT
5	13		relating to certain extraordinary costs incurred by certain gas
6	14		utilities relating to Winter Storm Uri and a study of measures to
7	15		mitigate similar future costs; providing authority to issue bonds
8	16		and impose fees and assessments.
9	17		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	18		SECTION 1. Section 1232.002, Government Code, is amended to
11	19		read as follows:
12	20		Sec. 1232.002. PURPOSE. The purpose of this chapter is to
13	21		provide a method of financing for:
14	22		(1) the acquisition or construction of buildings;
15	23		[and]
16	24		(2) the purchase or lease of equipment by executive or
17	25		judicial branch state agencies; and
18	26		(3) customer rate relief bonds authorized by the
19	27		Railroad Commission of Texas in accordance with Subchapter I,
20	28		Chapter 104, Utilities Code.
21	29		SECTION 2. Section 1232.066(a), Government Code, is amended
22	30		to read as follows:
23	31		(a) The board's authority under this chapter is limited to
24	32		the financing of:
25	33		(1) the acquisition or construction of a building;
26	34		(2) the purchase or lease of equipment; [or]
27	35		(3) stranded costs of a municipal power agency; or
28	36		(4) customer rate relief bonds approved by the
29	37		Railroad Commission of Texas in accordance with Subchapter I,
30	38		Chapter 104, Utilities Code.
31	39		SECTION 3. Subchapter C, Chapter 1232, Government Code, is
32	40		amended by adding Section 1232.1072 to read as follows:
33	41		Sec. 1232.1072. ISSUANCE OF OBLIGATIONS FOR FINANCING
34	42		CUSTOMER RATE RELIEF PROPERTY. (a) The definitions in Section
35	43		104.362, Utilities Code, apply to terms used in this section.
36	44		(b) The authority may create an issuing financing entity for
37	45		the purpose of issuing customer rate relief bonds approved by the
38	46		Railroad Commission of Texas in a financing order, as provided by
39	47		Subchapter I, Chapter 104, Utilities Code.
40	48		(c) An issuing financing entity created under this section
41	49		is a duly constituted public authority and instrumentality of the
42	50		state and is authorized to issue customer rate relief bonds on
43	51		behalf of the state for the purposes of Section 103, Internal
44	52		Revenue Code of 1986 (26 U.S.C. Section 103).
45	53		(d) The issuing financing entity must be governed by a
46	54		governing board of three members appointed by the authority. A
47	55		member of the governing board may be a current or former director of
48	56		the authority. A member of the governing board serves without
49	57		compensation but is entitled to reimbursement for travel expenses
50	58		incurred in attending board meetings.
51	59		(e) The issuing financing entity must be formed in
52	60		accordance with, be governed by, and have the powers, rights, and
53	61		privileges provided for a nonprofit corporation organized under the
54	62		Business Organizations Code, including Chapter 22 of that code,
55	63		subject to the express exceptions and limitations provided by this
56	64		section and Subchapter I, Chapter 104, Utilities Code. A single
57	65		organizer selected by the executive director of the authority shall
58	66		prepare the certificate of formation of the issuing financing
59	67		entity under Chapters 3 and 22, Business Organizations Code. The
60	68		certificate of formation must be consistent with the provisions of
61	69		this section.
62	70		(f) The authority shall establish the issuing financing
63	71		entity to act on behalf of the state as its duly constituted
64	72		authority and instrumentality to issue customer rate relief bonds
65	73		approved under Subchapter I, Chapter 104, Utilities Code.
66	74		(g) On a request to the authority from the Railroad
67	75		Commission of Texas, the authority shall direct an issuing
68	76		financing entity to issue customer rate relief bonds in accordance
69	77		with a financing order issued by the railroad commission as
70	78		provided in Subchapter I, Chapter 104, Utilities Code.
71	79		(h) Before the issuance of any customer rate relief bonds,
72	80		the authority and the Railroad Commission of Texas shall ensure
73	81		that adequate provision is made in any financing order for the
74	82		recovery of all issuance costs and all other fees, costs, and
75	83		expenses of the authority, the issuing financing entity, and any
76	84		advisors or counsel hired by the authority or the entity for the
77	85		purposes of this section during the life of the customer rate relief
78	86		bonds.
79	87		(i) Customer rate relief bonds are limited obligations of
80	88		the issuing financing entity payable solely from customer rate
81	89		relief property and any other money pledged by the issuing
82	90		financing entity to the payment of the bonds and are not a debt of
83	91		this state, the Railroad Commission of Texas, the authority, or a
84	92		gas utility.
85	93		(j) The Railroad Commission of Texas shall ensure that
86	94		customer rate relief charges are imposed, collected, and enforced
87	95		in an amount sufficient to pay on a timely basis all bond
88	96		obligations, financing costs, and bond administrative expenses
89	97		associated with any issuance of customer rate relief bonds.
90	98		(k) The authority and the Railroad Commission of Texas have
91	99		all the powers necessary to perform the duties and responsibilities
92	100		described by this section. This section shall be interpreted
93	101		broadly in a manner consistent with the most cost-effective
94	102		financing of customer rate relief property, including regulatory
95	103		assets, extraordinary costs, and related financing costs approved
96	104		by the Railroad Commission of Texas in accordance with Subchapter
97	105		I, Chapter 104, Utilities Code.
98	106		(l) Any interest on the customer rate relief bonds is not
99	107		subject to taxation by and may not be included as part of the
100	108		measurement of a tax by this state or a political subdivision of
101	109		this state.
102	110		(m) The authority shall make periodic reports to the
103	111		Railroad Commission of Texas and the public regarding each
104	112		financing made in accordance with Section 104.373(b), Utilities
105	113		Code, and if required by the applicable financing order.
106	114		(n) The issuing financing entity shall issue customer rate
107	115		relief bonds in accordance with and subject to other provisions of
108	116		Title 9 applicable to the authority.
109	117		(o) The issuing financing entity may exercise the powers
110	118		granted to the governing body of an issuer with regard to the
111	119		issuance of obligations and the execution of credit agreements
112	120		under Chapter 1371. A purpose for which bonds, obligations, or
113	121		other evidences of indebtedness are issued under this section and
114	122		Subchapter I, Chapter 104, Utilities Code, constitutes an eligible
115	123		project for purposes of Chapter 1371 of this code.
116	124		(p) Assets of an issuing financing entity may not be
117	125		considered part of any state fund and must be held outside the state
118	126		treasury. The liabilities of the issuing financing entity may not
119	127		be considered to be a debt of the state or a pledge of the state's
120	128		credit. An issuing financing entity must be self-funded from
121	129		customer rate relief property and established in accordance with
122	130		Subchapter I, Chapter 104, Utilities Code. A state agency may
123	131		provide money appropriated for the purpose to the issuing financing
124	132		entity to provide for initial operational expenses of the issuing
125	133		financing entity.
126	134		SECTION 4. Section 1232.108, Government Code, is amended to
127	135		read as follows:
128	136		Sec. 1232.108. LEGISLATIVE AUTHORIZATION REQUIRED. Except
129	137		as permitted by Section 1232.1072, 1232.109, 2166.452, or 2166.453,
130	138		before the board may issue and sell bonds, the legislature by the
131	139		General Appropriations Act or other law must have authorized:
132	140		(1) the specific project for which the bonds are to be
133	141		issued and sold; and
134	142		(2) the estimated cost of the project or the maximum
135	143		amount of bonded indebtedness that may be incurred by the issuance
136	144		and sale of bonds for the project.
137	145		SECTION 5. Chapter 104, Utilities Code, is amended by
138	146		adding Subchapter I to read as follows:
139	147		SUBCHAPTER I. CUSTOMER RATE RELIEF BONDS
140	148		Sec. 104.361. PURPOSE; RAILROAD COMMISSION DUTY. (a) The
141	149		purpose of this subchapter is to reduce the cost that customers
142	150		would otherwise experience because of extraordinary costs that gas
143	151		utilities incurred to secure gas supply and provide service during
144	152		Winter Storm Uri, and to restore gas utility systems after that
145	153		event, by providing securitization financing for gas utilities to
146	154		recover those costs. The securitization financing mechanism
147	155		authorized by this subchapter will:
148	156		(1) provide rate relief to customers by extending the
149	157		period during which the costs described by this subsection are
150	158		recovered from customers; and
151	159		(2) support the financial strength and stability of
152	160		gas utility companies.
153	161		(b) The railroad commission shall ensure that
154	162		securitization provides tangible and quantifiable benefits to
155	163		customers, greater than would have been achieved absent the
156	164		issuance of customer rate relief bonds.
157	165		Sec. 104.362. DEFINITIONS. In this subchapter:
158	166		(1) "Ancillary agreement" means a financial
159	167		arrangement entered into in connection with the issuance or payment
160	168		of customer rate relief bonds that enhances the marketability,
161	169		security, or creditworthiness of customer rate relief bonds,
162	170		including a bond, insurance policy, letter of credit, reserve
163	171		account, surety bond, interest rate or currency swap arrangement,
164	172		interest rate lock agreement, forward payment conversion
165	173		agreement, credit agreement, other hedging arrangement, or
166	174		liquidity or credit support arrangement.
167	175		(2) "Authority" means the Texas Public Finance
168	176		Authority.
169	177		(3) "Bond administrative expenses" means all costs and
170	178		expenses incurred by the railroad commission, the authority, or any
171	179		issuing financing entity to evaluate, issue, and administer
172	180		customer rate relief bonds issued under this subchapter, including
173	181		fees and expenses of the authority, any bond administrator, and the
174	182		issuing financing entity, fees for paying agents, trustees, and
175	183		attorneys, and fees for paying for other consulting and
176	184		professional services necessary to ensure compliance with this
177	185		subchapter, applicable state or federal law, and the terms of the
178	186		financing order.
179	187		(4) "Bond obligations" means the principal of a
180	188		customer rate relief bond and any premium and interest on a customer
181	189		rate relief bond issued under this subchapter, together with any
182	190		amount owed under a related ancillary agreement or credit
183	191		agreement.
184	192		(5) "Credit agreement" has the meaning assigned by
185	193		Section 1371.001, Government Code.
186	194		(6) "Customer rate relief bonds" means bonds, notes,
187	195		certificates, or other evidence of indebtedness or ownership the
188	196		proceeds of which are used directly or indirectly to recover,
189	197		finance, or refinance regulatory assets approved by the railroad
190	198		commission, including extraordinary costs and related financing
191	199		costs, and that are:
192	200		(A) issued by an issuing financing entity under a
193	201		financing order; and
194	202		(B) payable from and secured by customer rate
195	203		relief property and amounts on deposit in any trust accounts
196	204		established for the benefit of the customer rate relief bondholders
197	205		as approved by the applicable financing order.
198	206		(7) "Customer rate relief charges" means the amounts
199	207		authorized by the railroad commission as nonbypassable charges to
200	208		repay, finance, or refinance regulatory assets, including
201	209		extraordinary costs, financing costs, bond administrative
202	210		expenses, and other costs authorized by the financing order:
203	211		(A) imposed on and included in customer bills of
204	212		a gas utility that has received a regulatory asset determination
205	213		under Section 104.365;
206	214		(B) collected in full by a gas utility that has
207	215		received a regulatory asset determination under Section 104.365, or
208	216		its successors or assignees, or a collection agent, as servicer,
209	217		separate and apart from the gas utility's base rates; and
210	218		(C) paid by all existing or future customers
211	219		receiving service from a gas utility that has received a regulatory
212	220		asset determination under Section 104.365 or its successors or
213	221		assignees, even if a customer elects to purchase gas from an
214	222		alternative gas supplier.
215	223		(8) "Customer rate relief property" means:
216	224		(A) all rights and interests of an issuing
217	225		financing entity or any successor under a financing order,
218	226		including the right to impose, bill, collect, and receive customer
219	227		rate relief charges authorized in the financing order and to obtain
220	228		periodic adjustments to those customer rate relief charges as
221	229		provided in the financing order and in accordance with Section
222	230		104.370; and
223	231		(B) all revenues, collections, claims, rights to
224	232		payments, payments, money, or proceeds arising from the rights and
225	233		interests specified by Paragraph (A), regardless of whether the
226	234		revenues, collections, claims, rights to payments, payments,
227	235		money, or proceeds are imposed, billed, received, collected, or
228	236		maintained together with or commingled with other revenues,
229	237		collections, rights to payments, payments, money, or proceeds.
230	238		(9) "Financing costs" means any of the following:
231	239		(A) interest and acquisition, defeasance, or
232	240		redemption premiums that are payable on customer rate relief bonds;
233	241		(B) a payment required under an ancillary
234	242		agreement or credit agreement or an amount required to fund or
235	243		replenish reserve or other accounts established under the terms of
236	244		an indenture, ancillary agreement, or other financing document
237	245		pertaining to customer rate relief bonds;
238	246		(C) issuance costs or ongoing costs related to
239	247		supporting, repaying, servicing, or refunding customer rate relief
240	248		bonds, including servicing fees, accounting or auditing fees,
241	249		trustee fees, legal fees or expenses, consulting fees,
242	250		administrative fees, printing fees, financial advisor fees or
243	251		expenses, Securities and Exchange Commission registration fees,
244	252		issuer fees, bond administrative expenses, placement and
245	253		underwriting fees, capitalized interest, overcollateralization
246	254		funding requirements including amounts to fund or replenish any
247	255		reserve established for a series of customer rate relief bonds,
248	256		rating agency fees, stock exchange listing and compliance fees,
249	257		filing fees, and any other bond administrative expenses; and
250	258		(D) the costs to the railroad commission of
251	259		acquiring professional or consulting services for the purpose of
252	260		evaluating extraordinary costs under this subchapter.
253	261		(10) "Financing order" means an order adopted under
254	262		Section 104.366 approving the issuance of customer rate relief
255	263		bonds and the creation of customer rate relief property and
256	264		associated customer rate relief charges for the recovery of
257	265		regulatory assets, including extraordinary costs, related
258	266		financing costs, and other costs authorized by the financing order.
259	267		(11) "Financing party" means a holder of customer rate
260	268		relief bonds, including a trustee, a pledgee, a collateral agent,
261	269		any party under an ancillary agreement, or other person acting for
262	270		the holder's benefit.
263	271		(12) "Gas utility" means:
264	272		(A) an operator of natural gas distribution
265	273		pipelines that delivers and sells natural gas to the public and that
266	274		is subject to the railroad commission's jurisdiction under Section
267	275		102.001; or
268	276		(B) an operator that transmits, transports,
269	277		delivers, or sells natural gas or synthetic natural gas to
270	278		operators of natural gas distribution pipelines and whose rates for
271	279		those services are established by the railroad commission in a rate
272	280		proceeding filed under this chapter.
273	281		(13) "Issuing financing entity" means a special
274	282		purpose nonmember, nonstock, nonprofit public corporation
275	283		established by the authority under Section 1232.1072, Government
276	284		Code.
277	285		(14) "Nonbypassable" means a charge that:
278	286		(A) must be paid by all existing or future
279	287		customers receiving service from a gas utility that has received a
280	288		regulatory asset determination under Section 104.365 or the gas
281	289		utility's successors or assignees, even if a customer elects to
282	290		purchase gas from an alternative gas supplier; and
283	291		(B) may not be offset by any credit.
284	292		(15) "Normalized market pricing" means the average
285	293		monthly pricing at the Henry Hub for the three months immediately
286	294		preceding the month during which extraordinary costs were incurred,
287	295		plus contractual adders to the index price and other non-indexed
288	296		gas procurement costs.
289	297		(16) "Regulatory asset" includes extraordinary costs:
290	298		(A) recorded by a gas utility in the utility's
291	299		books and records in accordance with the uniform system of accounts
292	300		prescribed for natural gas companies subject to the provisions of
293	301		the Natural Gas Act (15 U.S.C. Section 717 et seq.) by the Federal
294	302		Energy Regulatory Commission and generally accepted accounting
295	303		principles; or
296	304		(B) classified as a receivable or financial asset
297	305		under international financial reporting standards under the
298	306		railroad commission's authorization in the Notice of Authorization
299	307		for Regulatory Asset Accounting for Local Distribution Companies
300	308		Affected by the February 2021 Winter Weather Event issued February
301	309		13, 2021.
302	310		(17) "Servicer" means, with respect to each issuance
303	311		of customer rate relief bonds, the entity identified by the
304	312		railroad commission in the financing order as servicer responsible
305	313		for collecting customer rate relief charges from participating gas
306	314		utilities, remitting all collected funds to the applicable issuing
307	315		financing entity or the bond trustee, calculating true-up
308	316		adjustments, and performing any other duties as specified in the
309	317		financing order.
310	318		(18) "Winter Storm Uri" means the North American
311	319		winter storm that occurred in February 2021.
312	320		Sec. 104.363. EXTRAORDINARY COSTS. For the purposes of
313	321		this subchapter, extraordinary costs are the reasonable and
314	322		necessary costs related to Winter Storm Uri, including carrying
315	323		costs, placed in a regulatory asset and approved by the railroad
316	324		commission in a regulatory asset determination under Section
317	325		104.365.
318	326		Sec. 104.364. JURISDICTION AND POWERS OF RAILROAD
319	327		COMMISSION AND OTHER REGULATORY AUTHORITIES. (a) The railroad
320	328		commission may authorize the issuance of customer rate relief bonds
321	329		if the requirements of Section 104.366 are met.
322	330		(b) The railroad commission may assess to a gas utility
323	331		costs associated with administering this subchapter. Assessments
324	332		must be recovered from rate-regulated customers as part of gas
325	333		cost.
326	334		(c) The railroad commission has exclusive, original
327	335		jurisdiction to issue financing orders that authorize the creation
328	336		of customer rate relief property. Customer rate relief property
329	337		must be created and vested in an issuing financing entity and does
330	338		not constitute property of the railroad commission or any gas
331	339		utility.
332	340		(d) Except as provided by Subsection (c), this subchapter
333	341		does not limit or impair a regulatory authority's plenary
334	342		jurisdiction over the rates, charges, and services rendered by gas
335	343		utilities in this state under Chapter 102.
336	344		Sec. 104.365. REGULATORY ASSET DETERMINATION. (a) The
337	345		railroad commission, on application of a gas utility to recover a
338	346		regulatory asset, shall determine the regulatory asset amount to be
339	347		recovered by the gas utility. A gas utility may request recovery of
340	348		a regulatory asset under this subchapter only if the regulatory
341	349		asset is related to Winter Storm Uri.
342	350		(b) A gas utility desiring to participate in the customer
343	351		rate relief bond process under a financing order by requesting
344	352		recovery of a regulatory asset must file an application with the
345	353		railroad commission on or before the 60th day after the effective
346	354		date of the Act enacting this subchapter.
347	355		(c) If the railroad commission does not make a final
348	356		determination regarding the regulatory asset amount to be recovered
349		-	by a gas utility before the ~~151st~~ day after the gas utility files
350		-	~~the~~ application, the railroad commission is considered to have
351		-	~~approved~~ the regulatory asset amount requested by the gas utility.
	357	+	by a gas utility before the 91st day after the gas utility files the
	358	+	application, the railroad commission is considered to have approved
	359	+	the regulatory asset amount requested by the gas utility.
352	360		(d) The regulatory asset determination is not subject to
353	361		reduction, impairment, or adjustment by further action of the
354	362		railroad commission, except as authorized by Section 104.370.
355	363		(e) The regulatory asset determination is not subject to
356	364		rehearing by the railroad commission and may be appealed only to a
357	365		Travis County district court by a party to the proceeding. The
358	366		appeal must be filed not later than the 15th day after the date the
359	367		order is signed by the railroad commission.
360	368		(f) The judgment of the district court may be reviewed only
361	369		by direct appeal to the Supreme Court of Texas. The appeal must be
362	370		filed not later than the 15th day after the date of entry of
363	371		judgment.
364	372		(g) All appeals shall be heard and determined by the
365	373		district court and the Supreme Court of Texas as expeditiously as
366	374		possible with lawful precedence over other matters. Review on
367	375		appeal shall be based solely on the record before the railroad
368	376		commission and briefs to the court and limited to whether the
369	377		financing order:
370	378		(1) complies with the constitution and laws of this
371	379		state and the United States; and
372	380		(2) is within the authority of the railroad commission
373	381		to issue under this subchapter.
374	382		(h) The railroad commission shall establish a schedule,
375	383		filing requirements, and a procedure for determining the prudence
376	384		of the costs included in a gas utility's regulatory asset.
377	385		(i) To the extent a gas utility subject to this subchapter
378	386		receives insurance proceeds, governmental grants, or other sources
379	387		of funding that compensate or otherwise reimburse or indemnify the
380	388		gas utility for extraordinary costs following the issuance of
381	389		customer rate relief bonds, the gas utility may record the amount in
382	390		a regulatory liability account and that amount shall be reviewed in
383	391		a future proceeding. If an audit conducted under a valid gas
384	392		purchase agreement identifies a change of greater than five percent
385	393		to the total amount of the gas supply costs incurred during the
386	394		event for which regulatory asset recovery was approved, the gas
387	395		utility may record the amount in a regulatory asset or regulatory
388	396		liability account and that amount shall be reviewed for recovery in
389	397		a future proceeding.
390	398		Sec. 104.366. FINANCING ORDERS AND ISSUANCE OF CUSTOMER
391	399		RATE RELIEF BONDS. (a) If the railroad commission determines that
392	400		customer rate relief bond financing for extraordinary costs is the
393	401		most cost-effective method of funding regulatory asset
394	402		reimbursements to be made to gas utilities, the railroad
395	403		commission, after the final resolution of all applications filed
396	404		under Section 104.365, may request the authority to direct an
397	405		issuing financing entity to issue customer rate relief bonds.
398	406		Before making the request, the railroad commission must issue a
399	407		financing order that complies with this section.
400	408		(b) To make the determination described by Subsection (a),
401	409		the railroad commission must find that the proposed structuring,
402	410		expected pricing, and proposed financing costs of the customer rate
403	411		relief bonds are reasonably expected to provide benefits to
404	412		customers by:
405	413		(1) considering customer affordability; and
406	414		(2) comparing:
407	415		(A) the estimated monthly costs to customers
408	416		resulting from the issuance of customer rate relief bonds; and
409	417		(B) the estimated monthly costs to customers that
410	418		would result from the application of conventional recovery methods.
411	419		(c) The financing order must:
412	420		(1) include a finding that the use of the
413	421		securitization financing mechanism is in the public interest and
414	422		consistent with the purposes of this subchapter;
415	423		(2) detail the total amount of the regulatory asset
416	424		determinations to be included in the customer rate relief bond
417	425		issuance;
418	426		(3) authorize the recovery of any tax obligation of
419	427		the gas utilities arising or resulting from:
420	428		(A) receipt of customer rate relief bond
421	429		proceeds; or
422	430		(B) collection or remittance of customer rate
423	431		relief charges through the gas utilities' gas cost recovery
424	432		mechanism or other means that the railroad commission determines
425	433		reasonable;
426	434		(4) authorize the issuance of customer rate relief
427	435		bonds through an issuing financing entity;
428	436		(5) include a statement of:
429	437		(A) the aggregated regulatory asset
430	438		determination to be included in the principal amount of the
431	439		customer rate relief bonds, not to exceed $10 billion for any
432	440		separate bond issue;
433	441		(B) the maximum scheduled final maturity of the
434	442		customer rate relief bonds, not to exceed 30 years, except that the
435	443		legal final maturity may be longer based on rating agency and market
436	444		considerations; and
437	445		(C) the maximum interest rate that the customer
438	446		rate relief bonds may bear, not to exceed the maximum net effective
439	447		interest rate allowed by law;
440	448		(6) provide for the imposition, collection, and
441	449		mandatory periodic formulaic adjustment of customer rate relief
442	450		charges in accordance with Section 104.370 by all gas utilities and
443	451		successors of gas utilities for which a regulatory asset
444	452		determination has been made under Section 104.365 to ensure that
445	453		the customer rate relief bonds and all related financing costs will
446	454		be paid in full and on a timely basis by customer rate relief
447	455		charges;
448	456		(7) authorize the creation of customer rate relief
449	457		property in favor of the issuing financing entity and pledge of
450	458		customer rate relief property to the payment of the customer rate
451	459		relief bonds;
452	460		(8) direct the issuing financing entity to disperse
453	461		the proceeds of customer rate relief bonds, net of bond issuance
454	462		costs, reserves, and any capitalized interest, to gas utilities for
455	463		which a regulatory asset determination has been made under Section
456	464		104.365 and include the amounts to be distributed to each
457	465		participating gas utility;
458	466		(9) provide that customer rate relief charges be
459	467		collected and allocated among customers of each gas utility for
460	468		which a regulatory determination has been made under Section
461	469		104.365 through uniform monthly volumetric charges to be paid by
462	470		customers as a component of the gas utility's gas cost or in another
463	471		manner that the railroad commission determines reasonable; and
464	472		(10) reflect the commitment made by a gas utility
465	473		receiving proceeds that the proceeds are in lieu of recovery of
466	474		those costs through the regular ratemaking process or other
467	475		mechanism to the extent the costs are reimbursed to the gas utility
468	476		by customer rate relief bond financing proceeds.
469	477		(d) The financing order may provide for a centralized
470	478		servicer to coordinate with participating gas utilities who bill
471	479		and collect customer rate relief charges and to provide certain
472	480		collection and forecast data required for calculating true-up
473	481		adjustments. The financing order may not provide for the railroad
474	482		commission, the authority, the issuing financing entity, or a
475	483		participating utility to act as servicer.
476	484		(e) The principal amount determined by the railroad
477	485		commission must be increased to include an amount sufficient to:
478	486		(1) pay the financing costs associated with the
479	487		issuance, including all bond administrative expenses to be paid
480	488		from the proceeds of the bonds;
481	489		(2) reimburse the authority and the railroad
482	490		commission for any costs incurred for the issuance of the customer
483	491		rate relief bonds and related bond administrative expenses;
484	492		(3) provide for any applicable bond reserve fund; and
485	493		(4) capitalize interest for the period determined
486	494		necessary by the railroad commission.
487	495		(f) The authority, consistent with this subchapter and the
488	496		terms of the financing order, shall:
489	497		(1) direct an issuing financing entity to issue
490	498		customer rate relief bonds at the railroad commission's request, in
491	499		accordance with the requirements of Chapter 1232, Government Code,
492	500		and other provisions of Title 9, Government Code, that apply to bond
493	501		issuance by a state agency;
494	502		(2) determine the methods of sale, types of bonds,
495	503		bond forms, interest rates, principal amortization, amount of
496	504		reserves or capitalized interest, and other terms of the customer
497	505		rate relief bonds that in the authority's judgment best achieve the
498	506		economic goals of the financing order and effect the financing at
499	507		the lowest practicable cost; and
500	508		(3) reimburse the railroad commission, the authority,
501	509		or any issuing financing entity for bond administrative expenses
502	510		and other costs authorized under this subchapter.
503	511		(g) To the extent authorized in the applicable financing
504	512		order, an issuing financing entity may enter into credit agreements
505	513		or ancillary agreements in connection with the issuance of customer
506	514		rate relief bonds.
507	515		(h) The financing order becomes effective in accordance
508	516		with its terms. The financing order, together with the customer
509	517		rate relief property and the customer rate relief charges
510	518		authorized by the financing order, is irrevocable and not subject
511	519		to reduction, impairment, or adjustment by further action of the
512	520		railroad commission, except as provided under Subsection (j) and
513	521		authorized by Section 104.370.
514	522		(i) The railroad commission shall issue a financing order
515	523		under this section not later than the 90th day following the date of
516	524		the conclusion of all proceedings filed under Section 104.365.
517	525		(j) A financing order is not subject to rehearing by the
518	526		railroad commission. A financing order may be appealed only to a
519	527		Travis County district court by a party to the proceeding. The
520	528		appeal must be filed not later than the 15th day after the date the
521	529		financing order is signed by the railroad commission.
522	530		(k) The judgment of the district court may be reviewed only
523	531		by direct appeal to the Supreme Court of Texas. The appeal must be
524	532		filed not later than the 15th day after the date of entry of
525	533		judgment.
526	534		(l) All appeals shall be heard and determined by the
527	535		district court and the Supreme Court of Texas as expeditiously as
528	536		possible with lawful precedence over other matters. Review on
529	537		appeal shall be based solely on the record before the railroad
530	538		commission and briefs to the court and is limited to whether the
531	539		financing order:
532	540		(1) complies with the constitution and laws of this
533	541		state and the United States; and
534	542		(2) is within the authority of the railroad commission
535	543		to issue under this subchapter.
536	544		(m) The railroad commission shall transmit a financing
537	545		order to the authority after all appeals under this section have
538	546		been exhausted.
539	547		(n) The authority shall direct an issuing financing entity
540	548		to issue customer rate relief bonds as soon as practicable and not
541	549		later than the 180th day after receipt of a financing order issued
542	550		under this section, except that the authority may cause the
543	551		issuance after the 180th day if necessary based on bond market
544	552		conditions, the receipt of necessary approvals, and the timely
545	553		receipt of necessary financial disclosure information from each
546	554		participating gas utility.
547	555		(o) The issuing financing entity shall deliver customer
548	556		rate relief bond proceeds net of upfront financing costs in
549	557		accordance with the applicable financing order.
550	558		(p) For the benefit of the authority, the issuing financing
551	559		entity, holders of customer rate relief bonds, and all other
552	560		financing parties, the railroad commission shall guarantee in a
553	561		financing order that the railroad commission will take all actions
554	562		in the railroad commission's powers to enforce the provisions of
555	563		the financing order to ensure that customer rate relief charge
556	564		revenues are sufficient to pay on a timely basis scheduled
557	565		principal and interest on the customer rate relief bonds and all
558	566		related financing costs and bond administrative expenses.
559	567		(q) The railroad commission shall make periodic reports to
560	568		the public regarding each financing.
561	569		Sec. 104.367. PROPERTY RIGHTS. (a) Customer rate relief
562	570		bonds are the limited obligation solely of the issuing financing
563	571		entity and are not a debt of a gas utility or a debt or a pledge of
564	572		the faith and credit of this state or any political subdivision of
565	573		this state.
566	574		(b) Customer rate relief bonds are nonrecourse to the credit
567	575		or any assets of this state or the authority. A trust fund created
568	576		in connection with the issuance of customer rate relief bonds is not
569	577		subject to Subtitle B, Title 9, Property Code.
570	578		(c) The rights and interests of an issuing financing entity
571	579		or the successor under a financing order, including the right to
572	580		receive customer rate relief charges authorized in the financing
573	581		order, are only contract rights until pledged in connection with
574	582		the issuance of the customer rate relief bonds, at which time the
575	583		rights and interests become customer rate relief property.
576	584		(d) Customer rate relief property created under a financing
577	585		order is vested ab initio in the issuing financing entity. Customer
578	586		rate relief property constitutes a present property right for
579	587		purposes of contracts concerning the sale or pledge of property,
580	588		notwithstanding that the imposition and collection of customer rate
581	589		relief charges depends on further acts of the gas utility or others
582	590		that have not yet occurred. The financing order remains in effect,
583	591		and the customer rate relief property continues to exist, for the
584	592		same period as the pledge of the state described by Section 104.374.
585	593		(e) All revenue and collections resulting from customer
586	594		rate relief charges constitute proceeds only of a property right
587	595		arising from the financing order.
588	596		(f) An amount owed by an issuing financing entity under an
589	597		ancillary agreement or a credit agreement is payable from and
590	598		secured by a pledge and interest in the customer rate relief
591	599		property to the extent provided in the documents evidencing the
592	600		ancillary agreement or credit agreement.
593	601		Sec. 104.368. PROPERTY INTEREST NOT SUBJECT TO SETOFF,
594	602		COUNTERCLAIM, SURCHARGE, OR DEFENSE. The interest of an issuing
595	603		financing entity or pledgee in customer rate relief property,
596	604		including the revenue and collections arising from customer rate
597	605		relief charges, is not subject to setoff, counterclaim, surcharge,
598	606		or defense by the gas utility or any other person or in connection
599	607		with the bankruptcy of the gas utility, the authority, or any other
600	608		entity. A financing order remains in effect and unabated
601	609		notwithstanding the bankruptcy of the gas utility, the authority,
602	610		an issuing financing entity, or any successor or assignee of the gas
603	611		utility, authority, or issuing financing entity.
604	612		Sec. 104.369. CUSTOMER RATE RELIEF CHARGES NONBYPASSABLE.
605	613		A financing order must include terms ensuring that the imposition
606	614		and collection of the customer rate relief charges authorized in
607	615		the order are nonbypassable.
608	616		Sec. 104.370. TRUE-UP MECHANISM. (a) A financing order
609	617		must include a formulaic true-up charge adjustment mechanism that
610	618		requires that the customer rate relief charges be reviewed and
611	619		adjusted at least annually by the servicer or replacement servicer,
612	620		including a subservicer or replacement subservicer, at time periods
613	621		and frequencies provided in the financing order, to:
614	622		(1) correct any overcollections or undercollections
615	623		of the preceding 12 months; and
616	624		(2) ensure the expected recovery of amounts sufficient
617	625		to provide for the timely payment of customer rate relief bond
618	626		principal and interest payments and other financing costs.
619	627		(b) True-up charge adjustments must become effective not
620	628		later than the 30th day after the date the railroad commission
621	629		receives a true-up charge adjustment letter from the servicer or
622	630		replacement servicer notifying the railroad commission of the
623	631		pending adjustment.
624	632		(c) Any administrative review of true-up charge adjustments
625	633		must be limited to notifying the servicer of mathematical or
626	634		clerical errors in the calculation. The servicer may correct the
627	635		error and refile a true-up charge adjustment letter, with the
628	636		adjustment becoming effective as soon as practicable but not later
629	637		than the 30th day after the date the railroad commission receives
630	638		the refiled letter.
631	639		Sec. 104.371. SECURITY INTERESTS; ASSIGNMENT; COMMINGLING;
632	640		DEFAULT. (a) Customer rate relief property does not constitute an
633	641		account or general intangible under Section 9.106, Business &
634	642		Commerce Code. The creation, granting, perfection, and enforcement
635	643		of liens and security interests in customer rate relief property
636	644		that secures customer rate relief bonds are governed by Chapter
637	645		1208, Government Code.
638	646		(b) The priority of a lien and security interest perfected
639	647		under this section is not impaired by any later adjustment of
640	648		customer rate relief charges under a mechanism adopted under
641	649		Section 104.370 or by the commingling of funds arising from
642	650		customer rate relief charges with other funds. Any other security
643	651		interest that may apply to those funds is terminated when the funds
644	652		are transferred to a segregated account for the issuing financing
645	653		entity or a financing party. If customer rate relief property has
646	654		been transferred to a trustee or another pledgee of the issuing
647	655		financing entity, any proceeds of that property must be held in
648	656		trust for the financing party.
649	657		(c) If a default or termination occurs under the customer
650	658		rate relief bonds, a district court of Travis County, on
651	659		application by or on behalf of the financing parties, shall order
652	660		the sequestration and payment to the financing parties of revenue
653	661		arising from the customer rate relief charges.
654	662		Sec. 104.372. BOND PROCEEDS IN TRUST. (a) The issuing
655	663		financing entity may deposit proceeds of customer rate relief bonds
656	664		issued by the issuing financing entity under this subchapter with a
657	665		trustee selected by the issuing financing entity or the proceeds
658	666		may be held by the comptroller in a dedicated trust fund outside the
659	667		state treasury in the custody of the comptroller.
660	668		(b) Bond proceeds, net of the financing costs and reserves
661	669		described by Subdivisions (2) and (3), including investment income,
662	670		must be held in trust for the exclusive benefit of the railroad
663	671		commission's policy of reimbursing gas utility costs and applied in
664	672		accordance with the financing order. The issuing financing entity
665	673		shall deliver the net proceeds, as provided in the applicable
666	674		financing order, to:
667	675		(1) reimburse each gas utility the regulatory asset
668	676		amount determined to be reasonable for that gas utility in the
669	677		financing order;
670	678		(2) pay the financing costs of issuing the bonds; and
671	679		(3) provide bond reserves or fund any capitalized
672	680		interest, as applicable.
673	681		(c) On full payment of the customer rate relief bonds and
674	682		any related financing costs, any customer rate relief charges or
675	683		other amounts held as security for the bonds shall be used to
676	684		provide credits to gas utility customers as provided in the
677	685		financing order.
678	686		Sec. 104.373. REPAYMENT OF CUSTOMER RATE RELIEF BONDS. (a)
679	687		As long as any customer rate relief bonds or related financing costs
680	688		remain outstanding, uniform monthly volumetric customer rate
681	689		relief charges must be paid by all current and future customers that
682	690		receive service from a gas utility for which a regulatory asset
683	691		determination has been made under Section 104.365. A gas utility
684	692		and its successors, assignees, or replacements shall continue to
685	693		bill and collect customer rate relief charges from the gas
686	694		utility's current and future customers until all customer rate
687	695		relief bonds and financing costs are paid in full.
688	696		(b) The authority shall report to the railroad commission
689	697		the amount of the outstanding customer rate relief bonds issued by
690	698		the issuing financing entity under this subchapter and the
691	699		estimated amount of annual bond administrative expenses.
692	700		(c) All revenue collected from the customer rate relief
693	701		charges shall be remitted promptly by the applicable servicers to
694	702		the issuing financing entity or the bond trustee for the customer
695	703		rate relief bonds to pay bond obligations and ongoing financing
696	704		costs, including bond administrative expenses, to ensure timely
697	705		payment of bond obligations and financing costs.
698	706		(d) Customer rate relief property, including customer rate
699	707		relief charges, may be applied only as provided by this subchapter.
700	708		(e) Bond obligations are payable only from sources provided
701	709		for payment by this subchapter.
702	710		Sec. 104.374. PLEDGE OF STATE. (a) Customer rate relief
703	711		bonds issued under this subchapter and any related ancillary
704	712		agreements or credit agreements are not a debt or pledge of the
705	713		faith and credit of this state or a state agency or political
706	714		subdivision of this state. A customer rate relief bond, ancillary
707	715		agreement, or credit agreement is payable solely from customer rate
708	716		relief charges as provided by this subchapter.
709	717		(b) Notwithstanding Subsection (a), this state, including
710	718		the railroad commission and the authority, pledges for the benefit
711	719		and protection of the financing parties and the gas utility that
712	720		this state will not take or permit any action that would impair the
713	721		value of customer rate relief property, or, except as permitted by
714	722		Section 104.370, reduce, alter, or impair the customer rate relief
715	723		charges to be imposed, collected, and remitted to financing parties
716	724		until the principal, interest and premium, and contracts to be
717	725		performed in connection with the related customer rate relief bonds
718	726		and financing costs have been paid and performed in full. Each
719	727		issuing financing entity shall include this pledge in any
720	728		documentation relating to customer rate relief bonds.
721	729		(c) Before the date that is two years and one day after the
722	730		date that an issuing financing entity no longer has any payment
723	731		obligation with respect to customer rate relief bonds, the issuing
724	732		financing entity may not wind up or dissolve the financing entity's
725	733		operations, may not file a voluntary petition under federal
726	734		bankruptcy law, and neither the board of the issuing financing
727	735		entity nor any public official nor any organization, entity, or
728	736		other person may authorize the issuing financing entity to be or to
729	737		become a debtor under federal bankruptcy law during that period.
730	738		The state covenants that it will not limit or alter the denial of
731	739		authority under this subsection, and the provisions of this
732	740		subsection are hereby made a part of the contractual obligation
733	741		that is subject to the state pledge made in this section.
734		-	Sec. 104.375. TAX EXEMPTION. (a) The sale or purchase of
735		-	or revenue derived from services performed in the issuance or
736		-	transfer of customer rate relief bonds issued under this subchapter
737		-	is exempt from taxation by this state or a political subdivision of
738		-	this state.
739		-	(b) A gas utility's receipt of customer rate relief charges
740		-	is exempt from state and local sales and use taxes and utility gross
741		-	receipts taxes and assessments, and is excluded from revenue for
742		-	purposes of franchise tax under Section 171.1011, Tax Code.
743		-	Sec. 104.376. RECOVERABLE TAX EXPENSE. A tax obligation of
744		-	the gas utility arising from receipt of customer rate relief bond
745		-	proceeds or from the collection or remittance of customer rate
746		-	relief charges is an allowable expense under Section 104.055.
747		-	Sec. 104.377. ISSUING FINANCING ENTITY OR FINANCING PARTY
	742	+	Sec. 104.375. TAX EXEMPTION. (a) Customer rate relief
	743	+	bonds issued under this subchapter, the proceeds of those bonds,
	744	+	the customer rate relief charges, and any transactions relating to
	745	+	customer rate relief bonds are exempt from taxation by this state or
	746	+	a political subdivision of this state.
	747	+	(b) A gas utility's receipt or collection of customer rate
	748	+	relief charges is exempt from state and local sales and use,
	749	+	franchise, and gross receipts taxes.
	750	+	(c) A tax obligation of the gas utility arising from receipt
	751	+	of customer rate relief bond proceeds or from the collection or
	752	+	remittance of customer rate relief charges is an expense that may be
	753	+	recovered by the gas utility.
	754	+	Sec. 104.376. ISSUING FINANCING ENTITY OR FINANCING PARTY
748	755		NOT PUBLIC UTILITY. An issuing financing entity or financing party
749	756		may not be considered to be a public utility or person providing
750	757		natural gas service solely by virtue of the transactions described
751	758		by this subchapter.
752		-	Sec. 104.~~378~~. NO PERSONAL LIABILITY. A commissioner of the
	759	+	Sec. 104.377. NO PERSONAL LIABILITY. A commissioner of the
753	760		railroad commission, a railroad commission employee, a member of
754	761		the board of directors of the authority, an employee of the
755	762		authority, or a director, officer, or employee of any issuing
756	763		financing entity is not personally liable for a result of an
757	764		exercise of a duty or responsibility established under this
758	765		subchapter.
759		-	Sec. 104.~~379~~. CATASTROPHIC WEATHER EVENT STUDY. (a) The
	766	+	Sec. 104.378. CATASTROPHIC WEATHER EVENT STUDY. (a) The
760	767		railroad commission shall conduct a study on measures to mitigate
761	768		catastrophic weather events, including measures to:
762	769		(1) establish natural gas storage capacity to ensure a
763	770		reliable gas supply, including location, ownership, and other
764	771		pertinent factors regarding gas storage capacity;
765	772		(2) assess the advantages and disadvantages of
766	773		requiring local distribution companies to use hedging tactics to
767	774		avoid volatile customer rates; and
768	775		(3) assess the advantages and disadvantages of
769	776		prohibiting spot market purchases during a catastrophic weather
770	777		event that contribute to volatile customer rates.
771	778		(b) Not later than December 1, 2022, the railroad commission
772	779		shall report the railroad commission's findings to the governor,
773	780		the lieutenant governor, and the speaker of the house of
774	781		representatives.
775	782		(c) This section expires August 31, 2023.
776		-	Sec. 104.~~380~~. SEVERABILITY. After the date customer rate
	783	+	Sec. 104.379. SEVERABILITY. After the date customer rate
777	784		relief bonds are issued under this subchapter, if any provision in
778	785		this title or portion of this title or related provisions in Title
779	786		9, Government Code, are held to be invalid or are invalidated,
780	787		superseded, replaced, repealed, or expire for any reason, that
781	788		occurrence does not affect the validity or continuation of this
782	789		subchapter or any other provision of this title or related
783	790		provisions in Title 9, Government Code, that are relevant to the
784	791		issuance, administration, payment, retirement, or refunding of
785	792		customer rate relief bonds or to any actions of a gas utility, its
786	793		successors, an assignee, a collection agent, or a financing party,
787	794		which shall remain in full force and effect.
788	795		SECTION 6. This Act takes effect immediately if it receives
789	796		a vote of two-thirds of all the members elected to each house, as
790	797		provided by Section 39, Article III, Texas Constitution. If this
791	798		Act does not receive the vote necessary for immediate effect, this
792	799		Act takes effect September 1, 2021.
793		-	______________________________ ______________________________
794		-	President of the Senate Speaker of the House
795		-	I certify that H.B. No. 1520 was passed by the House on April
796		-	20, 2021, by the following vote: Yeas 139, Nays 5, 1 present, not
797		-	voting; and that the House concurred in Senate amendments to H.B.
798		-	No. 1520 on May 28, 2021, by the following vote: Yeas 130, Nays 12,
799		-	1 present, not voting.
800		-	______________________________
801		-	Chief Clerk of the House
802		-	I certify that H.B. No. 1520 was passed by the Senate, with
803		-	amendments, on May 26, 2021, by the following vote: Yeas 29, Nays
804		-	2.
805		-	______________________________
806		-	Secretary of the Senate
807		-	APPROVED: __________________
808		-	Date
809		-	__________________
810		-	Governor
	800	+	* * * * *