By: Metcalf, Raymond, et al. 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, cybersecurity
measures, physical 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) cybersecurity 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) The commission shall issue an order to approve, modify,
or deny a plan filed under Subsection (b) and any associated rider
described by Subsection (i) not later than the 180th day after the
plan is filed with the commission. The commission may not approve a
plan if the commission determines that approving the plan is not in
the public interest.
(f) For a plan approved by the commission, with or without
modification, an electric utility may request a good cause
exception on implementing all or some of the measures or incurring
all or some of the estimated costs in the plan if operational needs,
business needs, financial conditions, or supply chain or labor
conditions dictate the exception. The commission's denial of a
plan 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 date 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 and
otherwise reasonable, 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, other than transmission-related costs.
If the commission approves the plan, 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, other than transmission-related costs, at the time the plan
is first implemented. The commission shall adopt a procedure for
reconciliation of an electric utility's distribution-related
expenses to implement an approved plan.
(j) As part of a review described by Subsection (g), the
commission shall reconcile the rider authorized under Subsection
(i) 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 distribution-related
costs relating to the implementation of the plan for future
recovery as a regulatory asset, including depreciation expense and
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 36.209 and 36.210 or another
general rate proceeding.
(l) Plan costs considered by the commission to be reasonable
and prudent may include only incremental costs that are not already
being recovered through the electric utility's base rates or any
other rate rider 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.
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.