84R7275 JXC-F
	By: Frullo	H.B. No. 1535

	A BILL TO BE ENTITLED
	AN ACT
	relating to rates of and certificates of convenience and necessity
	for certain non-ERCOT electric utilities.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Section 36.209, Utilities Code, is amended to
	read as follows:
	Sec. 36.209.  COST RECOVERY AND RATE ADJUSTMENT STANDARDS
	AND PROCEDURES FOR [BY] CERTAIN NON-ERCOT UTILITIES [OF CERTAIN
	TRANSMISSION COSTS]. (a) This section applies only to an electric
	utility that operates solely outside of ERCOT [in areas of this
	state included in the Southeastern Electric Reliability Council,
	the Southwest Power Pool, or the Western Electricity Coordinating
	Council and that owns or operates transmission facilities].
	(b)  The commission, after notice and opportunity for
	hearing, shall [may] allow an electric utility to adjust its rates
	to ensure timely recovery of the utility's [recover on an annual
	basis its] reasonable and necessary costs [expenditures] for
	transmission investment [infrastructure improvement costs] and
	changes in wholesale transmission charges to the [electric] utility
	under a tariff approved by a federal regulatory authority, to the
	extent that the costs or charges have not otherwise been recovered.
	The commission may allow the electric utility to recover only the
	costs and charges allocable to retail customers in the state and may
	not allow the [electric] utility to over-recover costs or charges.
	The standards and procedures described in Subsections (c)-(e)
	exclusively govern a rate adjustment described by this subsection.
	(c)  An electric utility may apply to adjust the utility's
	transmission rates on an interim basis not more than twice each
	calendar year to reflect changes in the utility's invested capital
	and wholesale transmission charges since the test year in the
	utility's most recent base rate case before the commission. An
	application is eligible for informal disposition under commission
	rules and Section 2001.056, Government Code. If the requirements
	for informal disposition are met, the presiding officer shall issue
	a notice of approval not later than the 60th day after the date a
	materially sufficient application is filed, unless good cause
	exists to extend the deadline or the presiding officer determines
	that the proceeding should be considered by the commission.
	(d)  If an electric utility elects to adjust the utility's
	transmission rates under this section, the new rates must reflect
	the addition and retirement of transmission facilities, including
	associated depreciation, federal income tax and other associated
	taxes, and the commission-authorized rate of return on the
	facilities. The commission shall use load growth during this
	process only for the purpose of establishing billing determinants
	to set new rates.
	(e)  An adjustment of an electric utility's transmission
	rates under this section is subject to reconciliation at the next
	complete review of the utility's transmission cost of service. As
	part of the complete review, the commission shall review the costs
	of the interim transmission plant additions to determine if the
	costs were reasonable and necessary. Any amounts resulting from an
	adjustment, including amounts associated with capital investment
	expenditures or transmission charges, that are found to have been
	unreasonable or unnecessary, plus the corresponding return and
	taxes, shall be refunded with carrying costs. For the period
	beginning on the date the over-recovery is determined to have begun
	and ending on the effective date of the electric utility's rates set
	in the complete review of the utility's transmission cost of
	service, carrying costs shall be calculated using the same rate of
	return that was applied to the transmission investments included in
	the adjustment. For the time period that begins on the effective
	date of the electric utility's rates set in the complete review of
	the utility's transmission cost of service, carrying costs shall be
	calculated using the utility's rate of return authorized in the
	complete review.
	(f)  In establishing the base rates of an electric utility
	under Subchapter C, or rates governed by Subsections (b)-(e) or  by
	Section 36.204, 36.205, or 36.210, the regulatory authority
	otherwise provided with jurisdiction over those rate proceedings
	shall determine the utility's revenue requirement based on, at the
	election of the utility:
	(1)  information submitted for a test year or other
	applicable historical period for rate proceedings described by this
	subsection; or
	(2)  updated information that reflects actual or
	estimated information for a period ending not later than the
	earlier of:
	(A)  the last day of the seventh month after the
	end of the test year or other applicable historical period for rate
	proceedings described by this subsection; or
	(B)  the 35th day after the date the applicable
	rate proceeding is filed.
	(g)  An electric utility that elects to update information as
	authorized by Subsection (f) is not precluded from proposing other
	known and measurable changes to the utility's historical rate
	information. If the utility proposes a known and measurable change
	to the information, the utility must provide a reasonable estimate
	or projection of the annualized effects of the change on the
	utility's operating expenses, invested capital, and revenues
	during the first 12 months the rates are expected to be in effect.
	For the purposes of this subsection, a known and measurable change
	is:
	(1)  anticipated to occur not later than during the
	first 12 months the rates are expected to be in effect;
	(2)  a change in the level of an electric utility's
	operating expenses, invested capital, or revenues; and
	(3)  a change whose existence is known, is reflected in
	a reasonable budget estimate, or is otherwise the subject of a
	reasonable estimate or projection.
	(h)  In a rate proceeding authorized by this subchapter or
	Subchapter C, notwithstanding Section 36.109(a), the regulatory
	authority with jurisdiction shall establish temporary rates on the
	application of the electric utility at a level that is 70 percent of
	the utility's requested increase, effective for consumption on and
	after the 35th day after the date the utility files to initiate the
	rate proceeding. The temporary rates shall remain in effect during
	any applicable suspension period until final rates become
	effective. On issuance of a final order that establishes new rates:
	(1)  money collected under the temporary rates in
	excess of the rate finally ordered is subject to refund; and
	(2)  the electric utility may surcharge bills to
	recover the amount by which the money collected under the temporary
	rates is less than the money that would have been collected under
	the rate finally ordered.
	(i)  If the electric utility does not apply for temporary
	rates under Subsection (h), the final rate set in a rate proceeding
	under this subchapter or Subchapter C shall be made effective for
	consumption on and after the 35th day after the date the utility
	filed to initiate the rate proceeding. The regulatory authority
	shall:
	(1)  require the electric utility to refund to
	customers money collected in excess of the rate finally ordered on
	or after the 35th day after the date the utility filed to initiate
	the rate proceeding; or
	(2)  authorize the electric utility to surcharge bills
	to recover the amount by which the money collected on or after the
	35th day after the date the utility filed to initiate the rate
	proceeding is less than the money that would have been collected
	under the rate finally ordered.
	(j)  An electric utility is entitled to file an application
	with the commission to recover, through a rate rider mechanism, a
	return of and on the prudent and reasonable capital expenditures,
	the reasonable and necessary operation and maintenance expenses,
	and the taxes associated with either the acquisition of an existing
	generating facility or the construction of a new generating
	facility. A rate proceeding under Subchapter C is not required to
	establish or adjust the rider. In a proceeding brought under this
	subsection to establish the initial rider, the commission shall
	issue a final order before the 181st day after the date the electric
	utility files the application with the commission. If the
	commission does not issue a final order before that date, the
	application is considered approved. An approved rider becomes
	effective on the date the generating facility begins to provide
	service to the electric utility's retail customers in this state,
	and continues in effect until the effective date of new base rates
	that allow the utility to recover the costs of the new generating
	facility from the utility's retail customers in this state. The
	electric utility may use both actual historical cost information
	and reasonable cost estimates as the basis for recovery under the
	initial rider. The rider must use the return on equity most
	recently approved by the commission in the electric utility's base
	rate proceedings.
	(k)  In the case of the acquisition of an existing generating
	facility, an electric utility may file the application for approval
	of a rider described by Subsection (j) in the same proceeding in
	which it seeks issuance of a certificate of convenience and
	necessity for the facility under Chapter 37. Notwithstanding
	Section 36.053, the utility's recoverable invested capital shall be
	based on the purchase price for the newly acquired facility.  In the
	case of a newly constructed generating facility, the utility may
	file its application for approval of a rider described by
	Subsection (j) not earlier than 180 days before the expected
	commercial operation date of the new facility.
	(l)  Once established, a rider described by Subsection (j) is
	subject to annual adjustment, so that the rider reflects historical
	costs from the most recent 12-month period available before the
	filing of an application to make the adjustment. An adjustment
	under the rider takes effect as a temporary rate, subject to refund
	based on the final commission decision, not later than the 35th day
	after the date of filing of an application to make the adjustment.
	The commission shall take final action on an application to make an
	adjustment not later than the 90th day after the date of filing. If
	the commission does not take final action before that date, the
	application is considered approved.
	(m)  A rider described by Subsection (j) is subject to a
	periodic true-up. A true-up must cover at least a 12-month period.
	In a true-up proceeding, the electric utility shall reconcile the
	revenues recovered by the utility under the rider with the actual
	prudent, reasonable, and necessary level of costs, and the rider
	shall be further adjusted as necessary to reflect the outcome of the
	reconciliation.
	SECTION 2.  Subchapter B, Chapter 37, Utilities Code, is
	amended by adding Section 37.058 to read as follows:
	Sec. 37.058.  CERTIFICATE AND DETERMINATION ISSUED TO
	CERTAIN NON-ERCOT UTILITIES FOR GENERATING FACILITY. (a) This
	section applies only to an electric utility that operates solely
	outside of ERCOT.
	(b)  An electric utility may file with the commission a
	request that the commission:
	(1)  grant a certificate for an electric generating
	facility;
	(2)  make a public interest determination for the
	purchase of an existing electric generating facility under Section
	14.101; or
	(3)  both grant a certificate and make a determination.
	(c)  The commission may grant a request described by
	Subsection (b).
	(d)  Notwithstanding any other law, in a proceeding
	involving the purchase of an existing electric generating facility,
	the commission shall issue a final order on a certificate for the
	facility or making a determination on the facility required by
	Section 14.101, as applicable, not later than the 181st day after
	the date a request for the certificate or determination is filed
	with the commission under Subsection (b). If the commission does
	not issue a final order before that date, the application is
	considered approved. For generating facilities granted a
	certificate under this subsection, notwithstanding Section 36.053,
	the utility's recoverable invested capital included in rates shall
	be based on the purchase price for the newly acquired facility.
	(e)  Notwithstanding any other law, in a proceeding
	involving a newly constructed generating facility, the commission
	shall issue a final order on a certificate for the facility not
	later than the 366th day after the date a request for the
	certificate is filed with the commission under Subsection (b). If
	the commission does not issue a final order before that date, the
	application is considered approved.
	SECTION 3.  The changes in law made by this Act apply only to
	a proceeding before the Public Utility Commission of Texas or other
	regulatory authority described by Section 11.003, Utilities Code,
	that commences on or after the effective date of this Act. A
	proceeding before the Public Utility Commission of Texas or other
	regulatory authority described by Section 11.003, Utilities Code,
	that commenced before the effective date of this Act is governed by
	the law in effect on the date the proceeding commenced, and that law
	is continued in effect for that purpose.
	SECTION 4.  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, 2015.