H.B. No. 2555
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 approve a
plan only if the commission determines that approving the plan is 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 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 be reviewed for the purposes of Chapter 36 or
this chapter. If the commission determines that the costs to
implement an approved plan were imprudently incurred or otherwise
unreasonable, those costs are subject to disallowance.
(i) Notwithstanding any other law, an electric utility may
file with a plan an application for a rider to recover the electric
utility's distribution investment that is made to implement a plan
and is used and useful to the electric utility in providing service
to the public. The electric utility may file the application before
the electric utility places into service the distribution
investment to implement an approved plan. The commission may
approve the rider application before the electric utility places
into service the distribution investment to implement an approved
plan. The commission may not approve a rider that would allow an
electric utility to begin recovering the distribution investment
before the utility begins to use the investment to provide service
to the public. If the commission approves or modifies the plan, the
commission shall determine the appropriate terms of the rider in
the approval order. The commission shall adopt a procedure for
reconciliation of an electric utility's distribution-related costs
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), after
commission review, 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 in a manner
consistent with Chapter 36, 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.
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.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 2555 was passed by the House on April
28, 2023, by the following vote: Yeas 147, Nays 0, 1 present, not
voting; and that the House concurred in Senate amendments to H.B.
No. 2555 on May 25, 2023, by the following vote: Yeas 134, Nays 7,
2 present, not voting.
______________________________
Chief Clerk of the House
I certify that H.B. No. 2555 was passed by the Senate, with
amendments, on May 17, 2023, by the following vote: Yeas 29, Nays
2.
______________________________
Secretary of the Senate
APPROVED: __________________
Date
__________________
Governor