Texas 2025 - 89th Regular

Texas Senate Bill SB1856 Compare Versions

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	1	+	89R6409 JXC-F
1	2		By: Creighton S.B. No. 1856
2		-	(In the Senate - Filed March 4, 2025; March 17, 2025, read
3		-	first time and referred to Committee on Business & Commerce;
4		-	April 28, 2025, reported adversely, with favorable Committee
5		-	Substitute by the following vote: Yeas 11, Nays 0; April 28, 2025,
6		-	sent to printer.)
7		-	Click here to see the committee vote
8		-	COMMITTEE SUBSTITUTE FOR S.B. No. 1856 By: Creighton
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10	4
11	5
12	6
13	7		A BILL TO BE ENTITLED
14	8		AN ACT
15	9		relating to a capacity cost recovery rider for certain electric
16	10		utilities.
17	11		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
18	12		SECTION 1. Subchapter E, Chapter 36, Utilities Code, is
19	13		amended by adding Section 36.216 to read as follows:
20	14		Sec. 36.216. RECOVERY OF ANNUAL CAPACITY-RELATED COSTS.
21	15		(a) This section applies only to an electric utility that operates
22	16		solely outside of ERCOT in areas of this state included in the
23	17		Southeastern Electric Reliability Council.
24		-	(b) It is the intent of the legislature that certain changes
25		-	to the level of an electric utility's capacity-related costs and
26		-	capacity-related revenues due to wholesale rate decisions and
27		-	determinations by a federal agency or a regional transmission
28		-	organization subject to federal jurisdiction should be timely
29		-	reflected in the utility's rates.
30		-	(c) On application by an electric utility that has not
31		-	exceeded the utility's authorized return on equity as shown in the
32		-	utility's most recent earnings monitoring report at the time of the
33		-	application, the commission shall establish a capacity cost
34		-	recovery rider that must be annually updated and that allows:
	18	+	(b) It is the intent of the legislature that:
	19	+	(1) an electric utility's recovery of capacity-related
	20	+	costs and return of capacity-related revenues, which may fluctuate,
	21	+	should be accomplished as contemporaneously as possible with the
	22	+	incurrence of those costs and the receipt of those revenues; and
	23	+	(2) a regulatory authority should presume to be just
	24	+	and reasonable capacity-related costs incurred or capacity-related
	25	+	revenues received through an electric utility's participation in a
	26	+	multi-state auction operated by a regional transmission
	27	+	organization or independent system organization authorized by the
	28	+	Federal Energy Regulatory Commission, as well as those costs and
	29	+	revenues incurred or received under a power purchase agreement
	30	+	under the jurisdiction of the Federal Energy Regulatory Commission,
	31	+	and any associated refund or surcharge.
	32	+	(c) On application by an electric utility, the commission
	33	+	shall establish a capacity cost recovery rider that can be updated
	34	+	at least annually and that ensures timely:
35	35		(1) recovery of the utility's costs that are eligible
36	36		as provided by Subsection (d); and
37		-	(2) return ~~to ratepayers~~ of the utility's revenues
38		-	~~that are eligible~~ as provided by Subsection (d).
39		-	(d) In this section, eligible costs and revenues ~~are~~
40		-	~~capacity-related~~ costs and revenues associated with the electric
	37	+	(2) return of the utility's revenues that are eligible
	38	+	as provided by Subsection (d).
	39	+	(d) In this section, eligible costs and revenues include:
	40	+	(1) costs and revenues associated with the electric
41	41		utility's participation in a multi-state capacity auction operated
42	42		by a regional transmission organization or independent system
43	43		organization authorized by the Federal Energy Regulatory
44		-	Commission, to the extent the costs and revenues are not already
45		-	being recovered through the utility's base rates.
46		-	(e) Amounts recovered through a capacity cost recovery
47		-	rider are subject to reconciliation in the next base rate
48		-	proceeding for the electric utility. As part of the
49		-	reconciliation, the commission shall review the costs and revenues
50		-	to determine if they were reasonable and prudently incurred and to
51		-	ensure the electric utility is only recovering costs allocable to
52		-	retail customers in this state and is not over-recovering costs. In
53		-	each base rate proceeding following the establishment of a capacity
54		-	cost recovery rider, the commission shall remove from the electric
55		-	utility's base rates all cost and revenue items eligible for
56		-	recovery through the electric utility's capacity cost recovery
57		-	rider.
	44	+	Commission; and
	45	+	(2) capacity-related costs and revenues associated
	46	+	with the utility's participation in power purchase agreements under
	47	+	the jurisdiction of the Federal Energy Regulatory Commission,
	48	+	including associated refunds and surcharges ordered by the Federal
	49	+	Energy Regulatory Commission, to the extent the costs and revenues
	50	+	are not included in the utility's base rates.
	51	+	(e) In each base rate proceeding following the
	52	+	establishment of a capacity cost recovery rider, the regulatory
	53	+	authority shall adjust the revenue requirement and rates of the
	54	+	electric utility's capacity cost recovery rider to include all
	55	+	eligible costs and revenues. The electric utility may not continue
	56	+	to include eligible costs or revenues in the utility's base rates
	57	+	unless the utility seeks and the commission approves termination of
	58	+	the utility's capacity cost recovery rider in a subsequent base
	59	+	rate proceeding.
58	60		(f) The annual revenue requirement and rates for a proposed
59	61		capacity cost recovery rider must include:
60		-	(1) the electric utility's calculated costs ~~and~~
	62	+	(1) the electric utility's calculated costs or
61	63		revenues for the upcoming year beginning on the June 1 associated
62	64		with the utility's participation in a multi-state capacity auction;
63		-	and
64		-	(2) a true-up amount that accounts for any difference
	65	+	(2) the utility's costs or revenues for the upcoming
	66	+	year beginning on the June 1 associated with any power purchase
	67	+	agreements under the jurisdiction of the Federal Energy Regulatory
	68	+	Commission, including any associated refunds or surcharges
	69	+	required by a Federal Energy Regulatory Commission order issued in
	70	+	the previous 12-month period; and
	71	+	(3) a true-up amount that accounts for any difference
65	72		between the utility's actual eligible costs and revenues and the
66	73		utility's actual collections under any capacity cost recovery rider
67	74		put into effect two years before the proposed effective date of the
68	75		proposed rider, plus:
69	76		(A) an amount to account for any mathematical
70	77		error identified in the utility's most recent capacity cost
71	78		recovery rider application proceeding; and
72	79		(B) an amount to account for any refunds or
73	80		surcharges ordered by the Federal Energy Regulatory Commission or
74	81		by a regional transmission organization or independent system
75	82		organization related to a previous year's capacity auction that:
76	83		(i) are identified on a regional
77	84		transmission organization or independent system operator
78	85		settlement statement; or
79	86		(ii) were directed by a Federal Energy
80		-	Regulatory Commission order issued in the preceding 12-month
81		-	period.
82		-	(g) The capacity cost recovery rider charges must be derived
83		-	using:
84		-	(1) the same production demand allocation factors
85		-	approved in the electric utility's most recent base rate case; and
86		-	(2) the projected billing determinants for the rate
87		-	effective period.
88		-	(h) The billing determinants must be derived using each
89		-	customer class's projected kilowatt-hour usage, except for
90		-	customer classes with demand meters for which the billing
91		-	determinants must be derived using each customer class's projected
92		-	kilowatt billing demand.
93		-	(i) Until the time the electric utility removes from base
94		-	rates the costs eligible for rider recovery under Subsection (d),
95		-	and the costs eligible for rider recovery described in Subsection
96		-	(g)(2), and these costs are recovered solely through the capacity
97		-	cost recovery rider, the calculation of the capacity cost recovery
98		-	rider must include a load growth adjustment to take into account
99		-	changes in the number of the utility's customers and the effects, on
100		-	a weather-normalized basis, that energy consumption and energy
101		-	demand have on the amount of revenue recovered through the
102		-	utility's base rates.
103		-	(j) The commission shall process an application to
	87	+	Regulatory Commission order issued in the previous 12-month period.
	88	+	(g) The commission shall process an application to
104	89		establish or update a capacity cost recovery rider in accordance
105		-	with Subsections (k)-(o).
106		-	(k) For a capacity cost recovery rider that will include an
	90	+	with Subsections (h)-(k).
	91	+	(h) For a capacity cost recovery rider that will include an
107	92		electric utility's costs to be incurred beginning on June 1 of a
108	93		given year, the utility must submit the rider application not later
109	94		than:
110	95		(1) May 15 of that year; or
111	96		(2) if the regional transmission organization or
112	97		independent system operator publishes its capacity auction cost
113	98		results after the 20th business day of April of that year, a date
114	99		that is the same number of days after May 15 of that year as the
115	100		number of days after the 20th business day of April the results were
116	101		published.
117		-	(l) The application must be fully documented, including
118		-	testimony and all supporting work papers in native format.
119		-	(m) A response to the electric utility's filing that is made
	102	+	(i) A response to the electric utility's filing that is made
120	103		by commission staff or an intervenor:
121		-	(1) must be filed not later than the 15th day after the
122		-	date of the utility's filing; and
123		-	(2) may address only whether the application conforms
124		-	with any rule the commission adopts to implement this section and
125		-	the mathematical accuracy of the utility's proposed capacity cost
126		-	recovery rider revenue requirement and rates.
127		-	(n) Any other inaccuracy identified under Subsection (m)(2)
128		-	may be addressed only in the electric utility's next capacity cost
	104	+	(1) must be filed not later than the seventh day after
	105	+	the date of the utility's filing; and
	106	+	(2) may address only the mathematical accuracy of the
	107	+	utility's proposed capacity cost recovery rider revenue
	108	+	requirement and rates.
	109	+	(j) An inaccuracy identified under Subsection (i)(2) may be
	110	+	addressed only in the electric utility's next capacity cost
129	111		recovery rider application.
130		-	(o) The commission may review costs and revenues and shall
131		-	issue an order approving, modifying, or denying an electric
132		-	utility's proposed or updated capacity cost recovery rider not
133		-	later than the 60th day after the date the application is filed.
134		-	(p) This section expires September 1, 2035.
	112	+	(k) The regulatory authority shall issue an order approving
	113	+	an electric utility's proposed capacity cost recovery rider not
	114	+	later than the 10th day after receipt of the utility's application.
	115	+	The electric utility may begin billing the rates proposed in the
	116	+	approved application for service rendered after the May 31 after
	117	+	the application is filed.
135	118		SECTION 2. An electric utility to which Section 36.216,
136	119		Utilities Code, as added by this Act, applies may file an
137		-	application with the Public Utility Commission of Texas to recover
138		-	eligible costs described by Section 36.216(d), Utilities Code, as
139		-	added by this Act, to be incurred before September 1, 2026,
140		-	regardless of whether the commission has adopted any rules
141		-	regarding capacity cost recovery riders. Not later than the 60th
142		-	day after the date the application is filed, the commission shall
143		-	issue an order approving, modifying, or denying the proposed or
144		-	updated capacity cost recovery rider. The electric utility shall
145		-	begin imposing the rates approved by the commission for service
	120	+	application with a regulatory authority to recover eligible costs
	121	+	described by Section 36.216(d), Utilities Code, as added by this
	122	+	Act, to be incurred before September 1, 2026, regardless of whether
	123	+	the Public Utility Commission of Texas has adopted any rules
	124	+	regarding capacity cost recovery riders. Not later than the 10th
	125	+	date after the date the application is filed, the regulatory
	126	+	authority shall issue an order authorizing the electric utility to
	127	+	begin imposing the rates proposed in the application for service
146	128		rendered during or after the first billing cycle of the month
147	129		following the issuance of the order.
148	130		SECTION 3. This Act takes effect immediately if it receives
149	131		a vote of two-thirds of all the members elected to each house, as
150	132		provided by Section 39, Article III, Texas Constitution. If this
151	133		Act does not receive the vote necessary for immediate effect, this
152	134		Act takes effect September 1, 2025.
153		-	* * * * *