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| 4 | 3 | | |
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| 5 | 4 | | A BILL TO BE ENTITLED |
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| 6 | 5 | | AN ACT |
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| 7 | 6 | | relating to cost recovery for costs arising from the |
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| 8 | 7 | | interconnection of certain electric generation facilities with the |
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| 9 | 8 | | ERCOT transmission system. |
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| 10 | 9 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 11 | 10 | | SECTION 1. Section 35.004, Utilities Code, is amended by |
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| 12 | 11 | | amending Subsection (d) and adding Subsection (d-1) to read as |
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| 13 | 12 | | follows: |
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| 14 | 13 | | (d) The commission shall price wholesale transmission |
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| 15 | 14 | | services within ERCOT based on the postage stamp method of pricing |
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| 16 | 15 | | under which a transmission-owning utility's rate is based on the |
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| 17 | 16 | | ERCOT utilities' combined annual costs of transmission, other than |
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| 18 | 17 | | costs that exceed the allowance described in Subsection (d-1), |
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| 19 | 18 | | divided by the total demand placed on the combined transmission |
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| 20 | 19 | | systems of all such transmission-owning utilities within a power |
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| 21 | 20 | | region. An electric utility subject to the freeze period imposed by |
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| 22 | 21 | | Section 39.052 may treat transmission costs in excess of |
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| 23 | 22 | | transmission revenues during the freeze period as an expense for |
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| 24 | 23 | | purposes of determining annual costs in the annual report filed |
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| 25 | 24 | | under Section 39.257. Notwithstanding Section 36.201, the |
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| 26 | 25 | | commission may approve wholesale rates that may be periodically |
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| 27 | 26 | | adjusted to ensure timely recovery of transmission investment. |
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| 28 | 27 | | Notwithstanding Section 36.054(a), if the commission determines |
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| 29 | 28 | | that conditions warrant the action, the commission may authorize |
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| 30 | 29 | | the inclusion of construction work in progress in the rate base for |
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| 31 | 30 | | transmission investment required by the commission under Section |
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| 32 | 31 | | 39.203(e). |
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| 33 | 32 | | (d-1) The commission by rule shall establish a reasonable |
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| 34 | 33 | | allowance for capital costs incurred to interconnect generation |
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| 35 | 34 | | resources and electric energy storage resources described by |
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| 36 | 35 | | Section 35.152(a) with the ERCOT transmission system, which must |
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| 37 | 36 | | include the costs of the direct interconnection of the generator to |
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| 38 | 37 | | the system and upgrades directly caused by the interconnection. |
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| 39 | 38 | | Any costs that exceed the allowance must be borne directly by the |
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| 40 | 39 | | generation resource or electric energy storage resource receiving |
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| 41 | 40 | | interconnection service through the facilities. |
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| 42 | 41 | | SECTION 2. This Act takes effect September 1, 2021. |
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