Texas 2021 - 87th Regular

Texas Senate Bill SB1782 Compare Versions

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1	1	By: Creighton S.B. No. 1782
2	2
3	3
4	4	A BILL TO BE ENTITLED
5	5	AN ACT
6	6	relating to the response and resilience of certain utilities to
7	7	major weather-related events or natural disasters.
8	8	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
9	9	SECTION 1. Section 36.402(a), Utilities Code, is amended to
10	10	read as follows:
11	11	(a) In this subchapter, "system restoration costs" means
12	12	reasonable and necessary costs, including costs expensed, charged
13	13	to self-insurance reserves, deferred, capitalized, or otherwise
14	14	financed, that are incurred by an electric utility due to any
15	15	activity or activities conducted by or on behalf of the electric
16	16	utility in connection with the restoration of service and
17	17	infrastructure associated with electric power outages affecting
18	18	customers of the electric utility as the result of any tropical
19	19	storm or hurricane, ice or snow storm, flood, or other
20	20	weather-related event or natural disaster that occurred in calendar
21	21	year 2008 or thereafter. System restoration costs include
22	22	mobilization, staging, and construction, reconstruction,
23	23	replacement, or repair of electric generation, transmission,
24	24	distribution, or general plant facilities. System restoration
25	25	costs shall include reasonable estimates of the costs of an
26	26	activity or activities conducted or expected to be conducted by or
27	27	on behalf of the electric utility in connection with the
28	28	restoration of service or infrastructure associated with electric
29	29	power outages, but such estimates shall be subject to true-up and
30	30	reconciliation after the actual costs are known. System
31	31	restoration costs also include reasonable and necessary
32	32	weatherization and storm-hardening costs incurred, as well as
33	33	reasonable estimates of costs to be incurred by the electric
34	34	utility, but such estimates shall be subject to true-up and
35	35	reconciliation after the actual costs are known.
36	36	SECTION 2. Chapter 36, Utilities Code, is amended by adding
37	37	Subchapter J to read as follows:
38	38	SUBCHAPTER J. LOWER COST FINANCING MECHANISM FOR
39	39	SECURITIZATION FOR RECOVERY OF SYSTEM RESTORATION COSTS
40	40	Sec. 36.407. LOWER COST FINANCING MECHANISM FOR
41	41	SECURITIZATION FOR RECOVERY OF SYSTEM RESTORATION COSTS; PURPOSE
42	42	AND DEFINITIONS.
43	43	(a) Except as otherwise specifically provided in this
44	44	subchapter, the same procedures, standards, and protections for
45	45	securitization authorized in Subchapter I and, to the extent made
46	46	applicable to Subchapter I, Subchapter G, Chapter 39, apply to the
47	47	lower cost financing mechanism for securitization of transition
48	48	costs (or "system restoration costs") as set forth in Subchapter I.
49	49	To the extent any conflict exists between the provisions of this
50	50	subchapter and Subchapter I or, to the extent made applicable by
51	51	Subchapter I, Subchapter G, Chapter 39, in cases involving the
52	52	securitization of system restoration costs under this subchapter,
53	53	the provisions of this subchapter control.
54	54	(b) The purpose of this subchapter is to make available a
55	55	lower cost and supplemental financing mechanism to allow an
56	56	electric utility to obtain timely recovery of system restoration
57	57	costs under Subchapter I through securitization and the issuance of
58	58	transition bonds (or "system restoration bonds") by an issuer other
59	59	than the electric utility or an affiliated special purpose entity.
60	60	Financing of system restoration costs pursuant to this subchapter
61	61	is hereby recognized to be a valid and essential public purpose.
62	62	(c) The Texas Electric Utility System Restoration
63	63	Corporation shall be created pursuant to this subchapter as a
64	64	special purpose public corporation and instrumentality of the state
65	65	for the essential public purpose of providing a lower cost
66	66	financing mechanism available to the commission and an electric
67	67	utility to attract low-cost capital to finance system restoration
68	68	costs.
69	69	(d) System restoration bonds issued consistent with this
70	70	subchapter will be solely the obligation of the issuer and the
71	71	corporation (as borrower, if applicable) and will not be a debt of
72	72	or a pledge of the faith and credit of the state.
73	73	(e) System restoration bonds issued consistent with this
74	74	subchapter shall be nonrecourse to the credit or any assets of the
75	75	state and the commission.
76	76	(f) This subchapter does not in any way limit or impair the
77	77	commission's jurisdiction under this title to regulate the rates
78	78	charged and the services rendered by electric utilities in this
79	79	state.
80	80	(g) An electric utility receiving the proceeds of
81	81	securitization financing under this subchapter shall not be
82	82	required to provide utility services to the corporation or the
83	83	state as a result of receiving such proceeds except in their role as
84	84	customers of the electric utility, nor shall this subchapter create
85	85	any obligation of the corporation or any issuer to provide any
86	86	electric services to the electric utility or its customers.
87	87	(h) As used in this subchapter:
88	88	(1) "corporation" means the Texas Electric
89	89	Utility System Restoration Corporation.
90	90	(2) "issuer" means the corporation or any other
91	91	Texas corporation, public trust, public instrumentality, or other
92	92	entity that issues system restoration bonds approved by a financing
93	93	order.
94	94	(3) For purposes of this subchapter, "qualified
95	95	costs," as defined by Section 39.302 and as used in Subchapter G,
96	96	Chapter 39, also includes all costs of establishing, maintaining,
97	97	and operating the corporation and all costs of the corporation and
98	98	any issuer in connection with the issuance and servicing of the
99	99	system restoration bonds, all as approved in the financing order.
100	100	(4) Except as otherwise specifically provided in this
101	101	subchapter, the defined terms provided in Subchapter I and, if made
102	102	applicable by Subchapter I, Subchapter G, Chapter 39, have the same
103	103	meaning in this subchapter.
104	104	Sec. 36.408. CREATION OF THE CORPORATION. (a) The
105	105	corporation shall be incorporated as a nonprofit corporation and
106	106	instrumentality of the state, and shall perform the essential
107	107	governmental function of financing system restoration costs in
108	108	accordance with this subchapter. The corporation shall perform
109	109	only those functions consistent with this subchapter, shall
110	110	exercise its powers through a governing board, and shall be subject
111	111	to the regulation of the commission. The corporation shall have a
112	112	legal existence as a public corporate body and instrumentality of
113	113	the state separate and distinct from the state.
114	114	(b) Assets of the corporation shall not be considered part
115	115	of any state fund. The state shall not budget for or provide any
116	116	general fund appropriations to the corporation, and the debts,
117	117	claims, obligations, and liabilities of the corporation shall not
118	118	be considered to be a debt of the state or a pledge of its credit.
119	119	The corporation shall be self-funded. Prior to the imposition of
120	120	transition charges (or "system restoration charges"), the
121	121	corporation may accept and expend for its operating expenses such
122	122	funds as may be received from any source, including financing
123	123	agreements with the state, a commercial bank, or another entity to
124	124	finance the corporation's obligations until the corporation
125	125	receives sufficient transition property to cover its operating
126	126	expenses as financing costs, and to repay any short-term borrowing
127	127	under any such financing agreement.
128	128	(c) The corporation shall have the powers, rights, and
129	129	privileges provided for a corporation organized under Chapter 22,
130	130	Business Organizations Code, subject to the express exceptions and
131	131	limitations set forth in this subchapter.
132	132	(d) An incorporator selected by the executive director of
133	133	the commission shall prepare the articles of incorporation of the
134	134	corporation under Chapter 22, Business Organizations Code, which
135	135	articles shall be consistent with the provisions of this
136	136	subchapter.
137	137	(e) State officers, departments, and agencies are
138	138	authorized to render services to the corporation within their
139	139	respective functions, as may be requested by the commission or the
140	140	corporation.
141	141	(f) The corporation and any issuer may retain such
142	142	professionals, financial advisors, and accountants as it may deem
143	143	necessary to fulfill its duties under this subchapter and may
144	144	determine their duties and compensation, subject to approval of the
145	145	commission.
146	146	(g) The governing body of the corporation shall be a board
147	147	of directors that shall consist of five members appointed by the
148	148	commission. All official action of the governing body shall
149	149	require the favorable vote of a majority of the board members
150	150	present and voting at any meeting of the board of directors.
151	151	Sec. 36.409. POWERS AND DUTIES OF THE CORPORATION. (a) The
152	152	corporation shall, in each instance subject to the prior
153	153	authorization of the commission, participate in the financial
154	154	transactions contemplated by this subchapter. The corporation
155	155	shall engage in no other business activities except those
156	156	activities provided for in this subchapter and those ancillary and
157	157	incidental thereto. Neither the corporation nor any issuer shall
158	158	apply any proceeds of system restoration bonds or system
159	159	restoration charges to any purpose not specified in a financing
160	160	order, or to any purpose in excess of the amount allowed for such
161	161	purpose in the order, or to any purpose in contravention of the
162	162	order.
163	163	(b) The governing board of the corporation shall, pursuant
164	164	to the provisions of this subchapter, have the power to employ or
165	165	retain such persons as are necessary to perform the duties of the
166	166	corporation.
167	167	(c) The corporation may:
168	168	(1) Acquire, sell, pledge, and transfer transition
169	169	property as necessary to effect the purposes of this subchapter. In
170	170	connection therewith, the corporation may agree to such terms and
171	171	conditions as it deems necessary and proper, consistent with the
172	172	terms of a financing order, (i) to acquire transition property and
173	173	to pledge such transition property, and any other collateral, (a)
174	174	to secure payment of system restoration bonds issued by the
175	175	corporation, together with payment of any other qualified costs, or
176	176	(b) to secure repayment of any borrowing from any other issuer of
177	177	system restoration bonds, or (ii) to sell the transition property
178	178	to another issuer, which may in turn pledge such transition
179	179	property, together with any other collateral, to the repayment of
180	180	system restoration bonds issued by the issuer together with any
181	181	other qualified costs;
182	182	(2) Issue system restoration bonds on terms and
183	183	conditions consistent with a financing order;
184	184	(3) Borrow funds from an issuer of system restoration
185	185	bonds to acquire transition property, and pledge such transition
186	186	property to the repayment of any borrowing from an issuer, together
187	187	with any related qualified costs, all on terms and conditions
188	188	consistent with a financing order. The corporation may also borrow
189	189	funds for initial operating expenses as specified in Section
190	190	36.408;
191	191	(4) Sue or be sued in its corporate name. The
192	192	corporation has the authority to intervene as a party before the
193	193	commission or any court in this state in any matter involving the
194	194	corporation's powers and duties;
195	195	(5) Negotiate and become a party to such contracts as
196	196	necessary, convenient, or desirable to carry out the purposes of
197	197	this subchapter; and
198	198	(6) Engage in corporate actions or undertakings that
199	199	are permitted for nonprofit corporations in this state and that are
200	200	not prohibited by, or contrary to, the provisions of this
201	201	subchapter.
202	202	(d) The corporation shall maintain separate accounts and
203	203	records relating to each electric utility that is collecting system
204	204	restoration charges for all charges, revenues, assets,
205	205	liabilities, and expenses relating to that utility's related system
206	206	restoration bond issuances.
207	207	(e) The governing board of the corporation shall be
208	208	prohibited from authorizing any rehabilitation, liquidation, or
209	209	dissolution of the corporation, and no such rehabilitation,
210	210	liquidation, or dissolution of the corporation shall take effect as
211	211	long as any system restoration bonds are outstanding unless
212	212	adequate protection and provision has been made for the payment of
213	213	the bonds pursuant to the documents authorizing the issuance of the
214	214	bonds. In the event of any rehabilitation, liquidation, or
215	215	dissolution, the assets of the corporation shall be applied first
216	216	to pay all debts, liabilities, and obligations of the corporation,
217	217	including the establishment of reasonable reserves for any
218	218	contingent liabilities or obligations, and all remaining funds of
219	219	the corporation shall be applied and distributed as provided by an
220	220	order of the commission.
221	221	(f) Prior to the date that is two years and one day after
222	222	which the corporation no longer has any payment obligation with
223	223	respect to any system restoration bonds, including any obligation
224	224	to any issuer of any system restoration bonds outstanding, the
225	225	corporation is prohibited from filing and shall have no authority
226	226	to file a voluntary petition under the Federal Bankruptcy Code, as
227	227	it may, from time to time, be in effect, and neither any public
228	228	official nor any organization, entity, or other person shall
229	229	authorize the corporation to be or to become a debtor under the
230	230	Federal Bankruptcy Code during such period. The state covenants
231	231	that it will not limit or alter the denial of authority under this
232	232	subsection or subsection (e), and the provisions of such
233	233	subsections are hereby made a part of the contractual obligation
234	234	that is subject to the state pledge set forth in Section 39.310.
235	235	(g) The corporation shall prepare an operating budget
236	236	annually that shall be submitted for approval to the commission. If
237	237	requested by the commission, the corporation shall prepare and
238	238	submit an annual report containing, among other appropriate
239	239	matters, the annual operating and financial statements of the
240	240	corporation.
241	241	Sec. 36.410. COMMISSION REGULATION OF THE CORPORATION. The
242	242	commission shall regulate the corporation as provided for in this
243	243	subchapter. Such regulation shall be concomitant with the
244	244	commission's regulation of public utilities. Notwithstanding such
245	245	regulation, the corporation is not a public utility.
246	246	Sec. 36.411. FINANCING ORDER. (a) This section applies to
247	247	the commission's issuance of a financing order under this
248	248	subchapter.
249	249	(b) Except as otherwise specifically provided in this
250	250	subchapter, the provisions in Subchapter I and, to the extent made
251	251	applicable to Subchapter I, Subchapter G, Chapter 39, addressing
252	252	the commission's issuance of a financing order apply to the
253	253	commission's issuance of a financing order under this subchapter.
254	254	(c) The corporation and any issuer shall be a party to the
255	255	commission's proceedings addressing the issuance of a financing
256	256	order along with the pertinent electric utility.
257	257	(d) A financing order issued under this subchapter shall, in
258	258	addition to the requirements of Subchapter I (as applicable):
259	259	(1) Require the sale, assignment, or other transfer of
260	260	certain specified transition property created by the financing
261	261	order to the corporation (in the manner contemplated by Section
262	262	39.308), and following such sale, assignment, or transfer, system
263	263	restoration charges paid under any financing order shall be
264	264	created, assessed, and collected as the property of the
265	265	corporation, subject to subsequent sale, assignment, or transfer by
266	266	the corporation as authorized under this subchapter.
267	267	(2) Authorize either:
268	268	(A) the issuance of system restoration bonds by
269	269	the corporation secured by a pledge of such specified transition
270	270	property, and the application of the proceeds of such system
271	271	restoration bonds (net of issuance costs) to the acquisition of the
272	272	transition property from the electric utility; or
273	273	(B) the acquisition of specified transition
274	274	property from the electric utility by the corporation, financed (i)
275	275	by a loan by an issuer to the corporation of the proceeds of system
276	276	restoration bonds (net of issuance costs), or (ii) by the
277	277	acquisition by an issuer from the corporation of such transition
278	278	property, and in each case, the pledge of such transition property
279	279	to the repayment of such loan or system restoration bonds, as
280	280	applicable;
281	281	(3) Authorize the electric utility to serve as
282	282	collection agent to collect the system restoration charges and
283	283	transfer those collected charges to the corporation, the issuer, or
284	284	a financing party, as appropriate.
285	285	(e) After issuance of the financing order, the corporation
286	286	shall arrange for the issuance of system restoration bonds as
287	287	specified in the financing order by it or another issuer selected by
288	288	the corporation and approved by the commission.
289	289	(f) System restoration bonds issued pursuant to a financing
290	290	order under this section are secured only by the related transition
291	291	property and any other funds pledged under the bond documents, and
292	292	no assets of the state or electric utility shall be subject to
293	293	claims by such bondholders. Notwithstanding the provisions in
294	294	Subchapter G, Chapter 39, following assignment of the transition
295	295	property, the electric utility shall not have any beneficial
296	296	interest or claim of right in such system restoration charges or in
297	297	any transition property.
298	298	Sec. 36.412. SEVERABILITY. Effective on the date the first
299	299	system restoration bonds associated with system restoration costs
300	300	are issued under this subchapter, if any provision in this title or
301	301	portion of this title is held to be invalid or is invalidated,
302	302	superseded, replaced, repealed, or expires for any reason, that
303	303	occurrence does not affect the validity or continuation of this
304	304	subchapter, Subchapter I, as it applies to this subchapter,
305	305	Subchapter G, Chapter 39, as it applies to this subchapter, or any
306	306	part of those provisions, or any other provision of this title that
307	307	is relevant to the issuance, administration, payment, retirement,
308	308	or refunding of system restoration bonds or to any actions of the
309	309	electric utility, its successors, an assignee, a collection agent,
310	310	the corporation, an issuer, or a financing party, and those
311	311	provisions shall remain in full force and effect.
312	312	SECTION 3. Section 37.051, Utilities Code, is amended by
313	313	adding Subsection (d) to read as follows:
314	314	(d) Notwithstanding any other provision of this title, an
315	315	electric utility may, but shall not be required to, obtain a
316	316	certificate to install, own, or operate a generation facility with
317	317	a capacity of ten megawatts or less.
318	318	SECTION 4. Section 37.056(c)(4)(E), Utilities Code, is
319	319	amended to read as follows:
320	320	(E) the probable improvement of service or
321	321	lowering of cost to consumers in the area if the certificate is
322	322	granted, including any potential economic or reliability benefits
323	323	associated with dual fuel and fuel storage capabilities; and
324	324	SECTION 5. Subchapter F, Chapter 104, Utilities Code, is
325	325	amended by adding Section 104.259 to read as follows:
326	326	Sec. 104.259. PRIORITIES DURING NATURAL GAS CURTAILMENT.
327	327	(a) If the curtailment of natural gas is necessary during a state
328	328	of disaster as declared by the governor or an extreme weather
329	329	emergency as defined in Section 104.258, a gas utility shall
330	330	observe the following priorities for the continued delivery of gas
331	331	in descending order:
332	332	(1) deliveries of natural gas by gas utilities to
333	333	residences, hospitals, schools, churches, and other human needs
334	334	customers, and deliveries to local distribution companies that
335	335	serve human needs customers.
336	336	(2) deliveries of natural gas by gas utilities to
337	337	electric generation facilities that serve human needs customers.
338	338	(3) deliveries of natural gas by gas utilities to
339	339	small industrial and regular commercial loads, defined as those
340	340	customers using less than 3,000,000 cubic feet of gas per day, and
341	341	delivery of gas for use as pilot lights or in accessory or auxiliary
342	342	equipment essential to avoid serious damage to industrial plants;
343	343	(4) deliveries of natural gas by gas utilities to
344	344	large users of gas for fuel as raw material where an alternate fuel
345	345	source cannot be used and operation and plant production would be
346	346	curtailed or completely cease when gas is curtailed;
347	347	(5) deliveries of natural gas by gas utilities to
348	348	large users of gas for boiler fuel or other fuel users where an
349	349	alternate fuel source can be used. This category is not to be
350	350	determined by whether or not a user has actually installed
351	351	alternate fuel facilities, but whether or not an alternate fuel
352	352	could be used.
353	353	SECTION 6. This Act takes effect immediately if it receives
354	354	a vote of two-thirds of all the members elected to each house, as
355	355	provided by Section 39, Article III, Texas Constitution. If this
356	356	Act does not receive the vote necessary for immediate effect, this
357	357	Act takes effect September 1, 2021.