89R6164 SCR-F
By: Metcalf H.B. No. 2868
A BILL TO BE ENTITLED
AN ACT
relating to the consideration of the proportion of long-term debt
and equity capitalization in establishing the rates of certain
electric utilities.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter B, Chapter 36, Utilities Code, is
amended by adding Section 36.068 to read as follows:
Sec. 36.068. CONSIDERATION OF PROPORTION OF LONG-TERM DEBT
AND EQUITY CAPITALIZATION. (a) This section applies only to an
electric utility that operates solely within ERCOT.
(b) Except as provided by Subsection (c), in considering an
electric utility's capitalization ratio when establishing the
utility's rates, the regulatory authority shall presume the return
on the utility's invested capital is reasonable if calculated:
(1) using the utility's actual proportion of long-term
debt and equity capitalization as reported on the utility's most
recent quarterly financial statement issued before the initiation
of the applicable rate proceeding; and
(2) in a manner consistent with the methodology
included in earnings monitoring reports.
(c) If the regulatory authority finds that the
capitalization ratio calculated in Subsection (b) is unreasonable,
the regulatory authority shall calculate the reasonable return on
the utility's invested capital using an equity capitalization ratio
equal to the national average for electric utility operating
companies.
SECTION 2. (a) Section 36.068, Utilities Code, as added by
this Act, applies only to a proceeding for the establishment of
rates for which the regulatory authority has not issued a final
order or decision before the effective date of this Act.
(b) A proceeding for which the regulatory authority has
issued a final order or decision before the effective date of this
Act is governed by the law in effect immediately before that date,
and that law is continued in effect for that purpose.
SECTION 3. 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, 2025.