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AN ACT
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relating to the securitization of the nonbypassable delivery rates |
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of transmission and distribution utilities. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 39.262, Utilities Code, is amended by |
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amending Subsection (c) and adding Subsections (l), (m), (n), and |
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(o) to read as follows: |
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(c) After January 10, 2004, at a schedule and under |
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procedures to be determined by the commission, each transmission |
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and distribution utility, its affiliated retail electric provider, |
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and its affiliated power generation company shall jointly file to |
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finalize stranded costs under Subsections (h) and (i) and reconcile |
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those costs with the estimated stranded costs used to develop the |
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competition transition charge in the proceeding held under Section |
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39.201. Any resulting difference shall be applied to the |
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nonbypassable delivery rates of the transmission and distribution |
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utility, except that at the utility's option, any or all of the |
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amounts recovered under this section [remaining stranded costs] may |
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be securitized under Subchapter G. |
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(l) To protect retail customers in this state, and ensure |
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the appropriateness of the nonbypassable rates of electric |
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utilities and transmission and distribution utilities, |
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notwithstanding any other provision of this title, an electric |
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utility or transmission and distribution utility must report to and |
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obtain approval of the commission before closing any transaction in |
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which: |
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(1) the electric utility or transmission and |
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distribution utility will be merged or consolidated with another |
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electric utility or transmission and distribution utility; |
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(2) at least 50 percent of the stock of the electric |
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utility or transmission and distribution utility will be |
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transferred or sold; or |
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(3) a controlling interest or operational control of |
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the electric utility or transmission and distribution utility will |
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be transferred. |
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(m) The commission shall approve a transaction under |
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Subsection (l) if the commission finds that the transaction is in |
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the public interest. In making its determination, the commission |
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shall consider whether the transaction will adversely affect the |
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reliability of service, availability of service, or cost of service |
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of the electric utility or transmission and distribution utility. |
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The commission shall make the determination concerning a |
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transaction under this subsection not later than the 180th day |
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after the date the commission receives the relevant report. If the |
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commission has not made a determination before the 181st day after |
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that date, the transaction is considered approved. |
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(n) Subsections (l) and (m) do not apply to a transaction |
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described by Subsection (l) for which a definitive agreement was |
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executed before April 1, 2007, if an electric utility or |
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transmission and distribution utility or a person seeking to |
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acquire or merge with an electric utility or transmission and |
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distribution utility made a filing for review of the transaction |
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under Section 14.101 before May 1, 2007, and the resulting |
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proceeding was not withdrawn. |
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(o) If an electric utility or transmission and distribution |
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utility or a person seeking to acquire or merge with an electric |
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utility or transmission and distribution utility files with the |
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commission a stipulation, representation, or commitment in advance |
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of or as part of a filing under Subsection (l) or under Section |
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14.101, the commission may enforce the stipulation, |
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representation, or commitment to the extent that the stipulation, |
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representation, or commitment is consistent with the standards |
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provided by this section and Section 14.101. The commission may |
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reasonably interpret and enforce conditions adopted under this |
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section. |
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SECTION 2. Section 39.301, Utilities Code, is amended to |
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read as follows: |
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Sec. 39.301. PURPOSE. The purpose of this subchapter is to |
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enable utilities to use securitization financing to recover |
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regulatory assets, all other amounts determined under Section |
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39.262, and any amounts being recovered under a competition |
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transition charge determined as a result of the proceedings under |
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Sections 39.201 and 39.262. This [and stranded costs, because this] |
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type of debt will lower the carrying costs of the assets relative to |
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the costs that would be incurred using conventional utility |
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financing methods. The proceeds of the transition bonds shall be |
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used solely for the purposes of reducing the amount of recoverable |
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regulatory assets and other amounts [stranded costs], as determined |
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by the commission in accordance with this chapter, through the |
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refinancing or retirement of utility debt or equity. The |
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commission shall ensure that securitization provides tangible and |
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quantifiable benefits to ratepayers, greater than would have been |
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achieved absent the issuance of transition bonds. The commission |
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shall ensure that the structuring and pricing of the transition |
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bonds result in the lowest transition bond charges consistent with |
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market conditions and the terms of the financing order. The amount |
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securitized may not exceed the present value of the revenue |
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requirement over the life of the proposed transition bond |
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associated with the regulatory assets or other amounts [stranded
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costs] sought to be securitized. The present value calculation |
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shall use a discount rate equal to the proposed interest rate on the |
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transition bonds. |
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SECTION 3. Section 39.302(4), Utilities Code, is amended to |
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read as follows: |
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(4) "Qualified costs" means 100 percent of an electric |
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utility's regulatory assets and 75 percent of its recoverable costs |
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determined by the commission under Section 39.201 and any remaining |
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amounts [stranded costs] determined under Section 39.262 together |
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with the costs of issuing, supporting, and servicing transition |
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bonds and any costs of retiring and refunding the electric |
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utility's existing debt and equity securities in connection with |
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the issuance of transition bonds. The term includes the costs to |
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the commission of acquiring professional services for the purpose |
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of evaluating proposed transactions under Section 39.201 and this |
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subchapter. |
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SECTION 4. Sections 39.303(a) and (b), Utilities Code, are |
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amended to read as follows: |
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(a) The commission shall adopt a financing order, on |
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application of a utility to recover the utility's regulatory assets |
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and other amounts determined [eligible stranded costs] under |
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Section 39.201 or 39.262, on making a finding that the total amount |
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of revenues to be collected under the financing order is less than |
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the revenue requirement that would be recovered over the remaining |
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life of the regulatory assets or other amounts [stranded costs] |
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using conventional financing methods and that the financing order |
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is consistent with the standards in Section 39.301. |
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(b) The financing order shall detail the amount of |
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regulatory assets and other amounts [stranded costs] to be |
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recovered and the period over which the nonbypassable transition |
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charges shall be recovered, which period may not exceed 15 years. |
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If an amount determined under Section 39.262 is subject to judicial |
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review at the time of the securitization proceeding, the financing |
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order shall include an adjustment mechanism requiring the utility |
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to adjust its rates, other than transition charges, or provide |
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credits, other than credits to transition charges, in a manner that |
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would refund over the remaining life of the transition bonds any |
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overpayments resulting from securitization of amounts in excess of |
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the amount resulting from a final determination after completion of |
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all appellate reviews. The adjustment mechanism may not affect the |
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stream of revenue available to service the transition bonds. An |
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adjustment may not be made under this subsection until all |
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appellate reviews, including, if applicable, appellate reviews |
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following a commission decision on remand of its original orders, |
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have been completed. |
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SECTION 5. This Act takes effect immediately if it receives |
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a vote of two-thirds of all the members elected to each house, as |
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provided by Section 39, Article III, Texas Constitution. If this |
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Act does not receive the vote necessary for immediate effect, this |
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Act takes effect August 27, 2007. |
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______________________________ |
______________________________ |
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President of the Senate |
Speaker of the House |
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I certify that H.B. No. 624 was passed by the House on March |
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14, 2007, by the following vote: Yeas 144, Nays 0, 2 present, not |
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voting; and that the House concurred in Senate amendments to H.B. |
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No. 624 on May 28, 2007, by the following vote: Yeas 144, Nays 0, 2 |
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present, not voting. |
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______________________________ |
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Chief Clerk of the House |
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I certify that H.B. No. 624 was passed by the Senate, with |
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amendments, on May 23, 2007, by the following vote: Yeas 31, Nays |
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0. |
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______________________________ |
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Secretary of the Senate |
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APPROVED: __________________ |
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Date |
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__________________ |
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Governor |