H.B. No. 1386
 
 
 
 
AN ACT
  relating to regulation of the decommissioning costs of certain
  nuclear-powered commercial electric generating units.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subchapter E, Chapter 39, Utilities Code, is
  amended by adding Section 39.206 to read as follows:
         Sec. 39.206.  NUCLEAR GENERATING UNIT DECOMMISSIONING COST
  PLAN.  (a)  For purposes of this section:
               (1)  "Decommissioning" includes decommissioning and
  decontamination of a nuclear generating unit consistent with
  federal Nuclear Regulatory Commission requirements.
               (2)  "Nuclear decommissioning trust" means an external
  and irrevocable trust created for the purpose of funding
  decommissioning obligations for a nuclear generating unit,
  consistent with federal Nuclear Regulatory Commission
  requirements.
               (3)  "Nuclear generating unit" means an electric
  generating facility that uses nuclear energy to generate
  electricity for sale and is licensed by the Nuclear Regulatory
  Commission and was under construction in this state after January
  1, 2007, but before January 1, 2015.
               (4)  "Power generation company" has the meaning
  assigned by Section 31.002.
               (5)  "Retail electric customer" means a retail electric
  customer:
                     (A)  in a geographic area of this state in which
  retail customer choice has been implemented; or
                     (B)  of a municipally owned utility or electric
  cooperative that has an agreement to purchase power from a nuclear
  generating unit.
         (b)  This section applies only to the first six nuclear
  generation units under construction by January 1, 2015, owned in
  whole or in part by a power generation company that elects to
  utilize the decommissioning mechanism set forth in this section.
         (c)  Nothing in this section shall be construed to require a
  power generation company to use a commission approved method to
  provide funds for decommissioning, if the power generation company
  can otherwise satisfy the decommissioning financial assurance
  requirements of the federal Nuclear Regulatory Commission.
         (d)  A power generation company that owns a nuclear
  generating unit shall fund out of operating revenues on an annual
  basis:
               (1)  the costs associated with funding the
  decommissioning obligations for the nuclear generating unit; or
               (2)  the power generation company's portion of the
  decommissioning costs for the nuclear generating unit in proportion
  to the company's ownership interest in the nuclear generating unit
  if the unit is owned by more than one person.
         (e)  The obligation to fund a nuclear decommissioning trust
  fund is not dischargeable in bankruptcy.
         (f)  A power generation company shall establish a nuclear
  decommissioning trust for a nuclear generating unit it owns or for
  the proportionate share of a nuclear generating unit of which it
  owns a part.  The funding obligations for the trust must begin
  before the nuclear generating unit commences its initial fuel load
  and begins commercial operation to generate power for sale.  The
  terms of the trust must be consistent with trust terms and
  conditions the federal Nuclear Regulatory Commission requires for
  providing financial assurance for decommissioning.
         (g)  The commission by order shall establish for a nuclear
  generating unit the amount of annual decommissioning funding
  necessary to meet the decommissioning obligations for the nuclear
  generating unit over the unit's operating license period as
  established by the federal Nuclear Regulatory Commission or over a
  shorter period of time at the election of the power generation
  company.  The power generation company shall perform a study on the
  cost of decommissioning to establish the decommissioning
  obligations before the nuclear generating unit begins commercial
  operation to generate power for sale.  The study shall be performed
  by the power generation company at least once in each three-year
  period during the unit's operating license period using the most
  current reasonably available information on the cost of
  decommissioning.  The commission shall conduct a proceeding at
  least once in each three-year period to review the study and other
  current reasonably available information on the cost of
  decommissioning and determine the reasonableness of the study.
         (h)  A power generation company shall file an annual report
  to provide the status of the decommissioning trust fund and to
  update the commission as to its ability to fund the decommissioning
  trust fund.  In determining the amount of the annual
  decommissioning funding under this subsection, at least once in
  each three-year period, the commission shall conduct a proceeding
  to review the balance of each nuclear decommissioning trust and the
  projected amount of annual decommissioning funding for the
  associated nuclear generating unit.  On the conclusion of the
  review proceeding, the commission by order shall revise the amount
  of annual funding for the nuclear generating unit in order to ensure
  that the nuclear decommissioning trust fund is adequately funded.
         (i)  A power generation company shall remit the appropriate
  amount of annual decommissioning funding to the nuclear
  decommissioning trust created for its proportionate ownership
  position in a nuclear generating unit in accordance with the
  commission's funding order issued under Subsection (g) or (h).  The
  commission shall take appropriate actions to ensure proper funding
  of the nuclear decommissioning trust, including possibly
  terminating the power generation company's registration to
  operate, if the company violates this subsection.
         (j)  A power generation company that owns a nuclear
  generating unit is the funds administrator of the nuclear
  decommissioning trust for the associated nuclear generating unit.  
  The company, as funds administrator, shall invest the trust funds
  in accordance with guidelines established by commission rule and
  consistent with the federal Nuclear Regulatory Commission
  guidelines so that the decommissioning funds, plus the amounts
  earned from investment of the funds, will be available at the time
  of decommissioning.  The commission shall adopt rules to define the
  company's specific duties as funds administrator and requirements
  regarding prudent management and investment of nuclear
  decommissioning trust funds.
         (k)  The commission shall adopt rules necessary to ensure
  that:
               (1)  a power generation company remits sufficient funds
  to a nuclear decommissioning trust on an annual basis, including
  projected earnings to approximate the amount remaining to be
  accumulated to cover the cost of decommissioning a nuclear
  generating unit at the end of its operating license period divided
  by the remaining years of the license and in accordance with
  applicable state and federal laws and regulations or over a shorter
  period of time at the election of the power generation company;
               (2)  the periodic cost studies and reviews described in
  Subsections (g) and (h) include all current reasonably available
  information as determined necessary and appropriate by the
  commission;
               (3)  all funds remitted to a nuclear decommissioning
  trust are prudently managed and spent for their intended purpose;
               (4)  the funds remitted to a nuclear decommissioning
  trust and the amounts earned from investing the funds, will be
  available for, and restricted to the purpose of decommissioning of
  the associated nuclear generating unit, including if the trust or
  nuclear generating unit is transferred to another person; and
               (5)  before a power generation company is allowed to
  take advantage of the mechanisms in this section, the company meets
  creditworthiness standards established by the commission to
  minimize the risk that retail electric customers will be
  responsible for funding any shortfall in the cost of
  decommissioning a nuclear generating unit.
         (l)  In addition to the nuclear decommissioning trust
  required by Subsection (f), for purposes of Subsection (k), the
  power generation company and its parent and affiliates shall
  provide financial assurances that funds will be available to
  satisfy up to 16 years of annual decommissioning funding in the
  event the power generation company defaults on its obligation to
  make annual funding to the decommissioning trust.  Within 180 days
  after the effective date of this section, the commission by rule
  shall establish the acceptable forms of financial assurance, which
  shall include, but not be limited to, parent guarantees and support
  agreements, letters of credit, surety or insurance, and such other
  requirements necessary to ensure compliance with this section.  In
  establishing the acceptable forms of assurance, and the eligibility
  requirements for each form of assurance, the commission shall
  consider the relative risk factors and creditworthiness attributes
  of potential applicant financial characteristics in order to
  minimize exposure of retail electric customers to default by power
  generation companies under this section. The power generation
  company may choose the manner of financial assurance for which it is
  eligible under the commission's rules.
         (m)  In the event the financial assurances provided by
  Subsection (k) are insufficient to meet the annual funding
  requirements of the decommissioning trust, the retail electric
  customers shall be responsible for funding any shortfall in the
  cost of decommissioning the nuclear generating unit.
         (n)  The commission shall determine the manner in which any
  shortfall in the cost of decommissioning a nuclear generating unit
  shall be recovered from retail electric customers in the state,
  consistent with law.
         (o)  For retail electric customers of a municipally owned
  utility or an electric cooperative that has an agreement to
  purchase power from a nuclear generating unit, the amount of the
  shortfall in the cost of decommissioning the nuclear generating
  unit that the customers are responsible for is limited to a portion
  of that shortfall that bears the same proportion to the total
  shortfall as the amount of electric power generated by the nuclear
  generating unit and purchased by the municipally owned utility or
  electric cooperative bears to the total amount of power the nuclear
  generating unit generated.
         (p)  If retail electric customers in this state become
  responsible for the costs of decommissioning a nuclear generating
  unit and incur costs under this section and the nuclear generating
  unit is operational, as a condition of operating the generating
  unit, the power generation company or any new owner shall repay the
  costs the electric customers incurred in the manner determined by
  the commission.  The commission may authorize the repayment to
  occur over a period established by the commission.
         (q)  The commission shall, in conjunction with the Nuclear
  Regulatory Commission, investigate the development of a mechanism
  whereby the State of Texas could ensure that funds for
  decommissioning will be obtained when necessary in the same manner
  as if the State of Texas were the licensee under federal law.  The
  commission shall file legislative recommendations regarding any
  changes in law that may be necessary to carry out the purposes of
  this subsection prior to January 15, 2009, which may be combined
  with the report required by Section 31.003.
         (r)  The commission by rule shall ensure that:
               (1)  money for decommissioning a nuclear generating
  unit is prudently collected, managed, and spent for its intended
  purposes; and
               (2)  decommissioning money that remains unspent after
  decommissioning of the nuclear generating unit is complete is
  returned to the power generation company and the retail electric
  customers based on the proportionate amount of money the power
  generation company and retail electric customers paid into the
  fund.
         SECTION 2.  This Act takes effect September 1, 2007.
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
 
         I certify that H.B. No. 1386 was passed by the House on April
  26, 2007, by the following vote:  Yeas 136, Nays 6, 1 present, not
  voting; that the House refused to concur in Senate amendments to
  H.B. No. 1386 on May 25, 2007, and requested the appointment of a
  conference committee to consider the differences between the two
  houses; and that the House adopted the conference committee report
  on H.B. No. 1386 on May 28, 2007, by the following vote:  Yeas 134,
  Nays 8, 4 present, not voting.
 
  ______________________________
  Chief Clerk of the House   
 
         I certify that H.B. No. 1386 was passed by the Senate, with
  amendments, on May 22, 2007, by the following vote:  Yeas 29, Nays
  1; at the request of the House, the Senate appointed a conference
  committee to consider the differences between the two houses; and
  that the Senate adopted the conference committee report on H.B. No.
  1386 on May 28, 2007, by the following vote:  Yeas 30, Nays 0.
 
  ______________________________
  Secretary of the Senate   
  APPROVED: __________________
                  Date       
   
           __________________
                Governor