This website will be unavailable from Friday, April 26, 2024 at 6:00 p.m. through Monday, April 29, 2024 at 7:00 a.m. due to data center maintenance.
H.B. No. 163
AN ACT
relating to the recovery and securitization of hurricane
reconstruction costs incurred by certain electric utilities
outside of the Electric Reliability Council of Texas area.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Sections 39.452(b) and (d), Utilities Code, are
amended to read as follows:
(b) Notwithstanding Subsection (a), except for adjustments
authorized by Sections 36.203, 39.454, 39.455, and 39.456, and
except for proceedings and cost recovery mechanisms authorized by
Sections 39.458-39.463, a person may not file a proceeding to
change, alter, or revoke any rate offered or charged by an electric
utility subject to this subchapter before June 30, 2007, with an
effective date no earlier than June 30, 2008. As part of a
Subchapter C, Chapter 36, rate proceeding, the utility shall
propose a competitive generation tariff to allow eligible customers
the ability to contract for competitive generation. The commission
shall approve, reject, or modify the proposed tariff. The tariffs
subject to this subsection may not be considered to offer a
discounted rate or rates under Section 36.007, and the utility's
rates shall be set, in the proceeding in which the tariff is
adopted, to recover any costs unrecovered as a result of the
implementation of the tariff.
(d) Until the date on which an electric utility subject to
this subchapter implements customer choice:
(1) the provisions of this chapter do not apply to that
electric utility, other than this subchapter, Sections 39.904 and
39.905, [and] the provisions relating to the duty to obtain a permit
from the Texas Commission on Environmental Quality for an electric
generating facility and to reduce emissions from an electric
generating facility, and the provisions of Subchapter G that
pertain to the recovery and securitization of hurricane
reconstruction costs authorized by Sections 39.458-39.463; and
(2) the electric utility is not subject to a rate
freeze and, subject to the limitation provided by Subsection (b),
may file for rate changes under Chapter 36 and for approval of one
or more of the rate rider mechanisms authorized by Sections 39.454
and 39.455.
SECTION 2. Subchapter J, Chapter 39, Utilities Code, is
amended by adding Sections 39.458-39.463 to read as follows:
Sec. 39.458. RECOVERY AND SECURITIZATION OF HURRICANE
RECONSTRUCTION COSTS; PURPOSE. (a) The purpose of this section and
of Sections 39.459-39.463 is to enable an electric utility subject
to this subchapter to obtain timely recovery of hurricane
reconstruction costs and to use securitization financing to recover
these costs, because that type of debt will lower the carrying costs
associated with the recovery of hurricane reconstruction costs
relative to the costs that would be incurred using conventional
financing methods. The proceeds of the transition bonds may be used
only for the purposes of reducing the amount of recoverable
hurricane reconstruction costs, as determined by the commission in
accordance with this subchapter, through the refinancing or
retirement of utility debt or equity.
(b) It is the intent of the legislature that:
(1) securitization of hurricane reconstruction costs
will be subject to the same procedures, standards, and protections
for the securitization of stranded costs and regulatory assets
under Subchapter G in effect on the effective date of this section,
except as provided by this subchapter; and
(2) the commission will ensure that securitization of
hurricane reconstruction costs provides greater tangible and
quantifiable benefits to ratepayers than would have been achieved
without the issuance of transition bonds.
Sec. 39.459. HURRICANE RECONSTRUCTION COSTS. (a) In this
subchapter:
(1) "Hurricane reconstruction costs" means reasonable
and necessary costs, including costs expensed, charged to the storm
reserve, or capitalized, that are incurred by an electric utility
subject to this subchapter due to any activity or activities
conducted by or on behalf of the electric utility in connection with
the restoration of service associated with electric power outages
affecting customers of the electric utility as the result of
Hurricane Rita, including mobilization, staging, and construction,
reconstruction, replacement, or repair of electric generation,
transmission, distribution, or general plant facilities.
(2) "Hurricane Rita" means the hurricane of that name
that struck the coastal region of this state in September 2005.
(b) If the commission determines it to be appropriate,
hurricane reconstruction costs may include carrying costs from the
date on which the hurricane reconstruction costs were incurred
until the date that transition bonds are issued.
(c) To the extent a utility subject to this subchapter
receives insurance proceeds, governmental grants, or any other
source of funding that compensates it for hurricane reconstruction
costs, those amounts shall be used to reduce the utility's
hurricane reconstruction costs recoverable from customers. If the
timing of a utility's receipt of those amounts prevents their
inclusion as a reduction to the hurricane reconstruction costs that
are securitized, the commission shall take those amounts into
account in:
(1) the utility's next base rate proceeding; or
(2) any proceeding in which the commission considers
hurricane reconstruction costs.
Sec. 39.460. STANDARDS AND PROCEDURES GOVERNING
SECURITIZATION OF HURRICANE RECONSTRUCTION COSTS. (a) The
procedures and standards of this subchapter and the provisions of
Subchapter G govern the application for, and the commission's
issuance of, a financing order to provide for the securitization of
hurricane reconstruction costs by an electric utility subject to
this subchapter.
(b) Subject to the standards, procedures, and tests
contained in this subchapter and Subchapter G, the commission shall
adopt a financing order on the application of the utility to recover
its hurricane reconstruction costs. On the commission's issuance
of a financing order allowing for recovery and securitization of
hurricane reconstruction costs, the provisions of this subchapter
and Subchapter G continue to govern the financing order and the
rights and interests established in the order, and this subchapter
and Subchapter G continue to govern any transition bonds issued
pursuant to the financing order. To the extent any conflict exists
between the provisions of this subchapter and Subchapter G in cases
involving the securitization of hurricane reconstruction costs,
the provisions of this subchapter control.
(c) For purposes of this subchapter, "financing order," as
defined by Section 39.302 and as used in Subchapter G, includes a
financing order authorizing the securitization of hurricane
reconstruction costs.
(d) For purposes of this subchapter, "qualified costs," as
defined by Section 39.302 and as used in Subchapter G, includes 100
percent of the electric utility's hurricane reconstruction costs
together with the costs of issuing, supporting, and servicing
transition bonds and any costs of retiring and refunding existing
debt and equity securities of an electric utility subject to this
subchapter in connection with the issuance of transition bonds.
For purposes of this subchapter, the term also includes the costs to
the commission of acquiring professional services for the purpose
of evaluating proposed transactions under this subchapter.
(e) For purposes of this subchapter, "transition bonds," as
defined by Section 39.302 and as used in Subchapter G, includes
transition bonds issued in association with the recovery of
hurricane reconstruction costs. Transition bonds issued to
securitize hurricane reconstruction costs may be called "hurricane
reconstruction bonds" or may be called by any other name acceptable
to the issuer and the underwriters of the transition bonds.
(f) For purposes of this subchapter, "transition charges,"
as defined by Section 39.302 and as used in Subchapter G, includes
nonbypassable amounts to be charged for the use of electric
services, approved by the commission under a financing order to
recover hurricane reconstruction costs, that shall be collected by
an electric utility subject to this subchapter, its successors, an
assignee, or other collection agents as provided for in the
financing order.
(g) Notwithstanding Section 39.303(c), hurricane
reconstruction costs shall be functionalized and allocated to
customers in the same manner as the corresponding facilities and
related expenses are functionalized and allocated in the utility's
current base rates.
(h) The amount of any accumulated deferred federal income
taxes offset, used to determine the securitization total, may not
be considered in future rate proceedings. Any tax obligation of the
electric utility arising from its receipt of securitization bond
proceeds, or from the collection and remittance of transition
charges, shall be recovered by the electric utility through the
commission's implementation of Section 39.458, Section 39.459,
this section, and Sections 39.461-39.463.
(i) If the commission determines that recovery of all or any
portion of an electric utility's hurricane reconstruction costs
using securitization is not beneficial to ratepayers of the
electric utility, under one or more of the tests applied to
determine those benefits, the commission shall permit the electric
utility to recover the entirety of the hurricane reconstruction
costs through an appropriate customer surcharge mechanism,
including appropriate carrying costs, provided that the electric
utility has not securitized any portion of its hurricane
reconstruction costs. A rate proceeding under Chapter 36 may not be
required to determine and implement this surcharge mechanism. A
rider adopted under this subsection must expire on the
implementation of rates resulting from the filing of a Subchapter
C, Chapter 36, rate proceeding.
Sec. 39.461. NONBYPASSABLE CHARGES. The commission may
include terms in the financing order to ensure that the imposition
and collection of transition charges associated with the recovery
of hurricane reconstruction costs are nonbypassable by imposing
restrictions on bypassability of the type provided for in this
chapter or by alternative means of ensuring nonbypassability, as
the commission considers appropriate, consistent with the purposes
of securitization.
Sec. 39.462. DETERMINATION OF HURRICANE RECONSTRUCTION
COSTS. (a) An electric utility subject to this subchapter is
entitled to recover hurricane reconstruction costs consistent with
the provisions of this subchapter and is entitled to seek recovery
of amounts not recovered under this subchapter, including hurricane
reconstruction costs not yet incurred at the time an application is
filed under Subsection (b), in its next base rate proceeding or
through any other proceeding authorized by Subchapter C, Chapter
36.
(b) The commission shall issue an order determining the
amount of hurricane reconstruction costs eligible for recovery and
securitization not later than the 150th day after the date an
electric utility subject to this subchapter files an application
seeking that determination. The 150-day period begins on the date
the electric utility files the application, even if the filing
occurs before the effective date of this section.
(c) On issuance by the commission of an order determining
the amount of eligible hurricane reconstruction costs, an electric
utility subject to this subchapter may file an application for a
financing order, which shall be governed by the procedures in
Subchapter G.
(d) To the extent the commission has made a determination of
the eligible hurricane reconstruction costs of an electric utility
subject to this subchapter before the effective date of this
section, that determination may provide the basis for the utility's
application for a financing order pursuant to this subchapter and
Subchapter G. A previous commission determination does not
preclude the utility from requesting recovery of additional
hurricane reconstruction costs eligible for recovery under this
subchapter, but not previously authorized by the commission.
(e) A rate proceeding under Chapter 36 is not required to
determine the amount of recoverable hurricane reconstruction costs
as provided by this section.
Sec. 39.463. SEVERABILITY. Effective on the date the first
utility transition bonds associated with hurricane reconstruction
costs are issued under this subchapter, if any provision in this
title or portion of this title is held to be invalid or is
invalidated, superseded, replaced, repealed, or expires for any
reason, that occurrence does not affect the validity or
continuation of this subchapter, Subchapter G as it applies to an
electric utility subject to this subchapter, or any part of those
provisions, or any other provision of this title that is relevant to
the issuance, administration, payment, retirement, or refunding of
transition bonds or to any actions of the electric utility, its
successors, an assignee, a collection agent, or a financing party,
and those provisions shall remain in full force and effect.
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 on the 91st day after the last day of the
legislative session.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 163 was passed by the House on May 12,
2006, by the following vote: Yeas 141, Nays 1, 1 present, not
voting.
______________________________
Chief Clerk of the House
I certify that H.B. No. 163 was passed by the Senate on May
12, 2006, by the following vote: Yeas 29, Nays 0.
______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor