88R21988 JXC-F
By: Metcalf H.B. No. 2555
Substitute the following for H.B. No. 2555:
By: Smithee C.S.H.B. No. 2555
A BILL TO BE ENTITLED
AN ACT
relating to transmission and distribution system resiliency
planning by and cost recovery for electric utilities.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The legislature finds that:
(1) extreme weather conditions, including high winds,
lightning, flooding, and freezes, can cause extraordinary damage to
electrical transmission and distribution facilities, resulting in
power outages;
(2) it is in the state's interest to promote the use of
resiliency measures to enable electrical transmission and
distribution infrastructure to withstand extreme weather
conditions, including hardening electrical transmission and
distribution facilities, undergrounding certain electrical
distribution lines, lightning mitigation measures, flood
mitigation measures, information technology and cyber security
measures, vegetation management, and wildfire mitigation and
response;
(3) protecting electrical transmission and
distribution infrastructure from extreme weather conditions can
effectively reduce system restoration costs to and outage times for
customers and improve system resiliency and overall service
reliability for customers;
(4) it is in the state's interest for each electric
utility to seek to mitigate system restoration costs to and outage
times for customers when developing plans to enhance electrical
transmission and distribution infrastructure storm resiliency; and
(5) all customers benefit from reduced system
restoration costs.
SECTION 2. Subchapter D, Chapter 38, Utilities Code, is
amended by adding Section 38.078 to read as follows:
Sec. 38.078. TRANSMISSION AND DISTRIBUTION SYSTEM
RESILIENCY PLAN AND COST RECOVERY. (a) In this section, "plan"
means a transmission and distribution system resiliency plan
described by Subsection (b).
(b) An electric utility may file, in a manner authorized by
commission rule, a plan to enhance the resiliency of the utility's
transmission and distribution system through at least one of the
following methods:
(1) hardening electrical transmission and
distribution facilities;
(2) modernizing electrical transmission and
distribution facilities;
(3) undergrounding certain electrical distribution
lines;
(4) lightning mitigation measures;
(5) flood mitigation measures;
(6) information technology;
(7) cyber security measures;
(8) physical security measures;
(9) vegetation management; or
(10) wildfire mitigation and response.
(c) A plan must explain the systematic approach the electric
utility will use to carry out the plan during at least a three-year
period.
(d) In determining whether to approve a plan filed under
this section, the commission shall consider:
(1) the extent to which the plan is expected to enhance
system resiliency, including whether the plan prioritizes areas of
lower performance; and
(2) the estimated costs of implementing the measures
proposed in the plan.
(e) Not later than the 180th day after an electric utility
files a plan under Subsection (b) that complies with any applicable
commission rules, the commission shall by order approve, approve
with modification, or deny the plan. The commission may not approve
a plan if the commission determines that approving the plan is not
in the public interest. If the commission does not issue an order
by the 180th day, the plan and any associated rider described by
Subsection (i) are considered to have been approved.
(f) If the commission approves the plan, the approval is not
considered to be a requirement for the purposes of Chapter 36 or
this chapter that an electric utility implement all the measures or
incur all the estimated costs in the plan if business needs,
financial conditions, or supply chain or labor conditions dictate
otherwise. If the commission denies the plan, the denial is not
considered to be a finding of the prudence or imprudence of a
measure or cost in the plan for the purposes of Chapter 36 or this
chapter.
(g) An electric utility for which the commission has
approved a plan under this section may request that the commission
review an updated plan submitted by the electric utility. The
updated plan must comply with any applicable commission rules and
take effect on a date that is not earlier than the third anniversary
of the approval of the utility's most recently approved plan. The
commission shall review and approve, modify, or deny the updated
plan in the manner provided by Subsections (d), (e), and (f).
(h) An electric utility's implementation of a plan approved
under this section may not be considered imprudent for the purposes
of Chapter 36 or this chapter. If the commission determines that
the costs to implement an approved plan were prudently incurred,
those costs are not subject to disallowance for exceeding the
estimates in the plan.
(i) Notwithstanding any other law, an electric utility may
file with a plan an application for a rider to recover all or a
portion of the estimated costs relating to the electric utility's
implementation of the plan. If the commission approves the plan and
the electric utility filed an application for a rider, the
commission shall determine the appropriate terms of the rider in
the approval order. A rider approved under this subsection must
allow the electric utility to begin recovering the levelized cost
of implementing the approved plan at the time the plan is first
implemented.
(j) As part of a review described by Subsection (g), the
commission shall reconcile any rider approved in connection with
the previously approved plan to determine the electric utility's
reasonably and prudently incurred plan costs.
(k) If an electric utility that files a plan with the
commission does not apply for a rider under Subsection (i), the
utility may defer all or a portion of the costs relating to the
implementation of the plan for future recovery as a regulatory
asset, including carrying costs at the utility's weighted average
cost of capital established in the commission's final order in the
utility's most recent base rate proceeding, and use commission
authorized cost recovery alternatives under Sections 35.004,
36.209, and 36.210 or another general rate proceeding.
(l) Plan costs considered by the commission to be reasonable
and prudent may not include the same costs otherwise recovered
through the electric utility's base rates and must be allocated to
customer classes pursuant to the rate design most recently approved
by the commission. If a capital investment is recoverable as a plan
cost, the electric utility may recover all reasonable and prudent
costs associated with the investment, including the annual
depreciation expense related to the investment calculated at the
utility's currently approved depreciation rates, the after-tax
return on the undepreciated balance of the investment calculated
using the rate of return approved by the commission in the utility's
last comprehensive base rate proceeding, and federal income tax and
other taxes related to the investment.
(m) An electric utility for which the commission has
approved a plan under this section is not required to submit to the
commission during the period in which the plan is in effect any
annual report required by Section 38.005 or 38.101 or by commission
rule adopted under those sections. This subsection does not apply
to an annual service quality report required by commission rule.
SECTION 3. The Public Utility Commission of Texas shall
adopt rules to implement Section 38.078, Utilities Code, as added
by this Act, not later than the 180th day after the effective date
of this Act.
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, 2023.