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AN ACT
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relating to certain extraordinary costs incurred by certain gas |
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utilities relating to Winter Storm Uri and a study of measures to |
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mitigate similar future costs; providing authority to issue bonds |
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and impose fees and assessments. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 1232.002, Government Code, is amended to |
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read as follows: |
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Sec. 1232.002. PURPOSE. The purpose of this chapter is to |
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provide a method of financing for: |
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(1) the acquisition or construction of buildings; |
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[and] |
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(2) the purchase or lease of equipment by executive or |
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judicial branch state agencies; and |
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(3) customer rate relief bonds authorized by the |
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Railroad Commission of Texas in accordance with Subchapter I, |
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Chapter 104, Utilities Code. |
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SECTION 2. Section 1232.066(a), Government Code, is amended |
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to read as follows: |
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(a) The board's authority under this chapter is limited to |
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the financing of: |
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(1) the acquisition or construction of a building; |
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(2) the purchase or lease of equipment; [or] |
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(3) stranded costs of a municipal power agency; or |
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(4) customer rate relief bonds approved by the |
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Railroad Commission of Texas in accordance with Subchapter I, |
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Chapter 104, Utilities Code. |
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SECTION 3. Subchapter C, Chapter 1232, Government Code, is |
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amended by adding Section 1232.1072 to read as follows: |
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Sec. 1232.1072. ISSUANCE OF OBLIGATIONS FOR FINANCING |
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CUSTOMER RATE RELIEF PROPERTY. (a) The definitions in Section |
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104.362, Utilities Code, apply to terms used in this section. |
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(b) The authority may create an issuing financing entity for |
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the purpose of issuing customer rate relief bonds approved by the |
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Railroad Commission of Texas in a financing order, as provided by |
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Subchapter I, Chapter 104, Utilities Code. |
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(c) An issuing financing entity created under this section |
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is a duly constituted public authority and instrumentality of the |
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state and is authorized to issue customer rate relief bonds on |
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behalf of the state for the purposes of Section 103, Internal |
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Revenue Code of 1986 (26 U.S.C. Section 103). |
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(d) The issuing financing entity must be governed by a |
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governing board of three members appointed by the authority. A |
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member of the governing board may be a current or former director of |
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the authority. A member of the governing board serves without |
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compensation but is entitled to reimbursement for travel expenses |
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incurred in attending board meetings. |
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(e) The issuing financing entity must be formed in |
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accordance with, be governed by, and have the powers, rights, and |
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privileges provided for a nonprofit corporation organized under the |
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Business Organizations Code, including Chapter 22 of that code, |
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subject to the express exceptions and limitations provided by this |
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section and Subchapter I, Chapter 104, Utilities Code. A single |
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organizer selected by the executive director of the authority shall |
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prepare the certificate of formation of the issuing financing |
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entity under Chapters 3 and 22, Business Organizations Code. The |
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certificate of formation must be consistent with the provisions of |
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this section. |
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(f) The authority shall establish the issuing financing |
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entity to act on behalf of the state as its duly constituted |
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authority and instrumentality to issue customer rate relief bonds |
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approved under Subchapter I, Chapter 104, Utilities Code. |
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(g) On a request to the authority from the Railroad |
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Commission of Texas, the authority shall direct an issuing |
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financing entity to issue customer rate relief bonds in accordance |
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with a financing order issued by the railroad commission as |
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provided in Subchapter I, Chapter 104, Utilities Code. |
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(h) Before the issuance of any customer rate relief bonds, |
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the authority and the Railroad Commission of Texas shall ensure |
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that adequate provision is made in any financing order for the |
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recovery of all issuance costs and all other fees, costs, and |
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expenses of the authority, the issuing financing entity, and any |
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advisors or counsel hired by the authority or the entity for the |
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purposes of this section during the life of the customer rate relief |
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bonds. |
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(i) Customer rate relief bonds are limited obligations of |
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the issuing financing entity payable solely from customer rate |
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relief property and any other money pledged by the issuing |
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financing entity to the payment of the bonds and are not a debt of |
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this state, the Railroad Commission of Texas, the authority, or a |
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gas utility. |
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(j) The Railroad Commission of Texas shall ensure that |
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customer rate relief charges are imposed, collected, and enforced |
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in an amount sufficient to pay on a timely basis all bond |
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obligations, financing costs, and bond administrative expenses |
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associated with any issuance of customer rate relief bonds. |
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(k) The authority and the Railroad Commission of Texas have |
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all the powers necessary to perform the duties and responsibilities |
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described by this section. This section shall be interpreted |
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broadly in a manner consistent with the most cost-effective |
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financing of customer rate relief property, including regulatory |
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assets, extraordinary costs, and related financing costs approved |
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by the Railroad Commission of Texas in accordance with Subchapter |
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I, Chapter 104, Utilities Code. |
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(l) Any interest on the customer rate relief bonds is not |
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subject to taxation by and may not be included as part of the |
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measurement of a tax by this state or a political subdivision of |
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this state. |
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(m) The authority shall make periodic reports to the |
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Railroad Commission of Texas and the public regarding each |
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financing made in accordance with Section 104.373(b), Utilities |
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Code, and if required by the applicable financing order. |
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(n) The issuing financing entity shall issue customer rate |
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relief bonds in accordance with and subject to other provisions of |
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Title 9 applicable to the authority. |
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(o) The issuing financing entity may exercise the powers |
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granted to the governing body of an issuer with regard to the |
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issuance of obligations and the execution of credit agreements |
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under Chapter 1371. A purpose for which bonds, obligations, or |
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other evidences of indebtedness are issued under this section and |
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Subchapter I, Chapter 104, Utilities Code, constitutes an eligible |
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project for purposes of Chapter 1371 of this code. |
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(p) Assets of an issuing financing entity may not be |
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considered part of any state fund and must be held outside the state |
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treasury. The liabilities of the issuing financing entity may not |
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be considered to be a debt of the state or a pledge of the state's |
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credit. An issuing financing entity must be self-funded from |
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customer rate relief property and established in accordance with |
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Subchapter I, Chapter 104, Utilities Code. A state agency may |
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provide money appropriated for the purpose to the issuing financing |
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entity to provide for initial operational expenses of the issuing |
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financing entity. |
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SECTION 4. Section 1232.108, Government Code, is amended to |
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read as follows: |
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Sec. 1232.108. LEGISLATIVE AUTHORIZATION REQUIRED. Except |
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as permitted by Section 1232.1072, 1232.109, 2166.452, or 2166.453, |
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before the board may issue and sell bonds, the legislature by the |
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General Appropriations Act or other law must have authorized: |
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(1) the specific project for which the bonds are to be |
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issued and sold; and |
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(2) the estimated cost of the project or the maximum |
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amount of bonded indebtedness that may be incurred by the issuance |
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and sale of bonds for the project. |
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SECTION 5. Chapter 104, Utilities Code, is amended by |
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adding Subchapter I to read as follows: |
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SUBCHAPTER I. CUSTOMER RATE RELIEF BONDS |
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Sec. 104.361. PURPOSE; RAILROAD COMMISSION DUTY. (a) The |
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purpose of this subchapter is to reduce the cost that customers |
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would otherwise experience because of extraordinary costs that gas |
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utilities incurred to secure gas supply and provide service during |
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Winter Storm Uri, and to restore gas utility systems after that |
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event, by providing securitization financing for gas utilities to |
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recover those costs. The securitization financing mechanism |
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authorized by this subchapter will: |
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(1) provide rate relief to customers by extending the |
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period during which the costs described by this subsection are |
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recovered from customers; and |
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(2) support the financial strength and stability of |
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gas utility companies. |
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(b) The railroad commission shall ensure that |
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securitization provides tangible and quantifiable benefits to |
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customers, greater than would have been achieved absent the |
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issuance of customer rate relief bonds. |
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Sec. 104.362. DEFINITIONS. In this subchapter: |
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(1) "Ancillary agreement" means a financial |
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arrangement entered into in connection with the issuance or payment |
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of customer rate relief bonds that enhances the marketability, |
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security, or creditworthiness of customer rate relief bonds, |
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including a bond, insurance policy, letter of credit, reserve |
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account, surety bond, interest rate or currency swap arrangement, |
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interest rate lock agreement, forward payment conversion |
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agreement, credit agreement, other hedging arrangement, or |
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liquidity or credit support arrangement. |
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(2) "Authority" means the Texas Public Finance |
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Authority. |
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(3) "Bond administrative expenses" means all costs and |
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expenses incurred by the railroad commission, the authority, or any |
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issuing financing entity to evaluate, issue, and administer |
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customer rate relief bonds issued under this subchapter, including |
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fees and expenses of the authority, any bond administrator, and the |
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issuing financing entity, fees for paying agents, trustees, and |
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attorneys, and fees for paying for other consulting and |
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professional services necessary to ensure compliance with this |
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subchapter, applicable state or federal law, and the terms of the |
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financing order. |
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(4) "Bond obligations" means the principal of a |
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customer rate relief bond and any premium and interest on a customer |
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rate relief bond issued under this subchapter, together with any |
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amount owed under a related ancillary agreement or credit |
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agreement. |
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(5) "Credit agreement" has the meaning assigned by |
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Section 1371.001, Government Code. |
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(6) "Customer rate relief bonds" means bonds, notes, |
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certificates, or other evidence of indebtedness or ownership the |
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proceeds of which are used directly or indirectly to recover, |
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finance, or refinance regulatory assets approved by the railroad |
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commission, including extraordinary costs and related financing |
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costs, and that are: |
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(A) issued by an issuing financing entity under a |
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financing order; and |
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(B) payable from and secured by customer rate |
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relief property and amounts on deposit in any trust accounts |
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established for the benefit of the customer rate relief bondholders |
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as approved by the applicable financing order. |
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(7) "Customer rate relief charges" means the amounts |
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authorized by the railroad commission as nonbypassable charges to |
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repay, finance, or refinance regulatory assets, including |
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extraordinary costs, financing costs, bond administrative |
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expenses, and other costs authorized by the financing order: |
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(A) imposed on and included in customer bills of |
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a gas utility that has received a regulatory asset determination |
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under Section 104.365; |
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(B) collected in full by a gas utility that has |
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received a regulatory asset determination under Section 104.365, or |
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its successors or assignees, or a collection agent, as servicer, |
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separate and apart from the gas utility's base rates; and |
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(C) paid by all existing or future customers |
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receiving service from a gas utility that has received a regulatory |
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asset determination under Section 104.365 or its successors or |
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assignees, even if a customer elects to purchase gas from an |
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alternative gas supplier. |
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(8) "Customer rate relief property" means: |
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(A) all rights and interests of an issuing |
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financing entity or any successor under a financing order, |
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including the right to impose, bill, collect, and receive customer |
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rate relief charges authorized in the financing order and to obtain |
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periodic adjustments to those customer rate relief charges as |
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provided in the financing order and in accordance with Section |
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104.370; and |
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(B) all revenues, collections, claims, rights to |
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payments, payments, money, or proceeds arising from the rights and |
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interests specified by Paragraph (A), regardless of whether the |
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revenues, collections, claims, rights to payments, payments, |
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money, or proceeds are imposed, billed, received, collected, or |
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maintained together with or commingled with other revenues, |
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collections, rights to payments, payments, money, or proceeds. |
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(9) "Financing costs" means any of the following: |
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(A) interest and acquisition, defeasance, or |
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redemption premiums that are payable on customer rate relief bonds; |
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(B) a payment required under an ancillary |
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agreement or credit agreement or an amount required to fund or |
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replenish reserve or other accounts established under the terms of |
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an indenture, ancillary agreement, or other financing document |
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pertaining to customer rate relief bonds; |
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(C) issuance costs or ongoing costs related to |
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supporting, repaying, servicing, or refunding customer rate relief |
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bonds, including servicing fees, accounting or auditing fees, |
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trustee fees, legal fees or expenses, consulting fees, |
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administrative fees, printing fees, financial advisor fees or |
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expenses, Securities and Exchange Commission registration fees, |
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issuer fees, bond administrative expenses, placement and |
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underwriting fees, capitalized interest, overcollateralization |
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funding requirements including amounts to fund or replenish any |
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reserve established for a series of customer rate relief bonds, |
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rating agency fees, stock exchange listing and compliance fees, |
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filing fees, and any other bond administrative expenses; and |
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(D) the costs to the railroad commission of |
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acquiring professional or consulting services for the purpose of |
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evaluating extraordinary costs under this subchapter. |
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(10) "Financing order" means an order adopted under |
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Section 104.366 approving the issuance of customer rate relief |
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bonds and the creation of customer rate relief property and |
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associated customer rate relief charges for the recovery of |
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regulatory assets, including extraordinary costs, related |
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financing costs, and other costs authorized by the financing order. |
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(11) "Financing party" means a holder of customer rate |
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relief bonds, including a trustee, a pledgee, a collateral agent, |
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any party under an ancillary agreement, or other person acting for |
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the holder's benefit. |
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(12) "Gas utility" means: |
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(A) an operator of natural gas distribution |
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pipelines that delivers and sells natural gas to the public and that |
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is subject to the railroad commission's jurisdiction under Section |
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102.001; or |
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(B) an operator that transmits, transports, |
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delivers, or sells natural gas or synthetic natural gas to |
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operators of natural gas distribution pipelines and whose rates for |
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those services are established by the railroad commission in a rate |
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proceeding filed under this chapter. |
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(13) "Issuing financing entity" means a special |
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purpose nonmember, nonstock, nonprofit public corporation |
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established by the authority under Section 1232.1072, Government |
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Code. |
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(14) "Nonbypassable" means a charge that: |
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(A) must be paid by all existing or future |
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customers receiving service from a gas utility that has received a |
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regulatory asset determination under Section 104.365 or the gas |
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utility's successors or assignees, even if a customer elects to |
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purchase gas from an alternative gas supplier; and |
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(B) may not be offset by any credit. |
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(15) "Normalized market pricing" means the average |
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monthly pricing at the Henry Hub for the three months immediately |
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preceding the month during which extraordinary costs were incurred, |
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plus contractual adders to the index price and other non-indexed |
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gas procurement costs. |
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(16) "Regulatory asset" includes extraordinary costs: |
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(A) recorded by a gas utility in the utility's |
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books and records in accordance with the uniform system of accounts |
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prescribed for natural gas companies subject to the provisions of |
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the Natural Gas Act (15 U.S.C. Section 717 et seq.) by the Federal |
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Energy Regulatory Commission and generally accepted accounting |
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principles; or |
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(B) classified as a receivable or financial asset |
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under international financial reporting standards under the |
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railroad commission's authorization in the Notice of Authorization |
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for Regulatory Asset Accounting for Local Distribution Companies |
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Affected by the February 2021 Winter Weather Event issued February |
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13, 2021. |
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(17) "Servicer" means, with respect to each issuance |
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of customer rate relief bonds, the entity identified by the |
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railroad commission in the financing order as servicer responsible |
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for collecting customer rate relief charges from participating gas |
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utilities, remitting all collected funds to the applicable issuing |
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financing entity or the bond trustee, calculating true-up |
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adjustments, and performing any other duties as specified in the |
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financing order. |
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(18) "Winter Storm Uri" means the North American |
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winter storm that occurred in February 2021. |
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Sec. 104.363. EXTRAORDINARY COSTS. For the purposes of |
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this subchapter, extraordinary costs are the reasonable and |
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necessary costs related to Winter Storm Uri, including carrying |
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costs, placed in a regulatory asset and approved by the railroad |
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commission in a regulatory asset determination under Section |
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104.365. |
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Sec. 104.364. JURISDICTION AND POWERS OF RAILROAD |
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COMMISSION AND OTHER REGULATORY AUTHORITIES. (a) The railroad |
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commission may authorize the issuance of customer rate relief bonds |
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if the requirements of Section 104.366 are met. |
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(b) The railroad commission may assess to a gas utility |
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costs associated with administering this subchapter. Assessments |
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must be recovered from rate-regulated customers as part of gas |
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cost. |
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(c) The railroad commission has exclusive, original |
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jurisdiction to issue financing orders that authorize the creation |
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of customer rate relief property. Customer rate relief property |
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must be created and vested in an issuing financing entity and does |
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not constitute property of the railroad commission or any gas |
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utility. |
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(d) Except as provided by Subsection (c), this subchapter |
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does not limit or impair a regulatory authority's plenary |
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jurisdiction over the rates, charges, and services rendered by gas |
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utilities in this state under Chapter 102. |
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Sec. 104.365. REGULATORY ASSET DETERMINATION. (a) The |
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railroad commission, on application of a gas utility to recover a |
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regulatory asset, shall determine the regulatory asset amount to be |
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recovered by the gas utility. A gas utility may request recovery of |
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a regulatory asset under this subchapter only if the regulatory |
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asset is related to Winter Storm Uri. |
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(b) A gas utility desiring to participate in the customer |
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rate relief bond process under a financing order by requesting |
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recovery of a regulatory asset must file an application with the |
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railroad commission on or before the 60th day after the effective |
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date of the Act enacting this subchapter. |
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(c) If the railroad commission does not make a final |
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determination regarding the regulatory asset amount to be recovered |
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by a gas utility before the 151st day after the gas utility files |
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the application, the railroad commission is considered to have |
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approved the regulatory asset amount requested by the gas utility. |
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(d) The regulatory asset determination is not subject to |
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reduction, impairment, or adjustment by further action of the |
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railroad commission, except as authorized by Section 104.370. |
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(e) The regulatory asset determination is not subject to |
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rehearing by the railroad commission and may be appealed only to a |
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Travis County district court by a party to the proceeding. The |
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appeal must be filed not later than the 15th day after the date the |
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order is signed by the railroad commission. |
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(f) The judgment of the district court may be reviewed only |
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by direct appeal to the Supreme Court of Texas. The appeal must be |
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filed not later than the 15th day after the date of entry of |
|
judgment. |
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(g) All appeals shall be heard and determined by the |
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district court and the Supreme Court of Texas as expeditiously as |
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possible with lawful precedence over other matters. Review on |
|
appeal shall be based solely on the record before the railroad |
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commission and briefs to the court and limited to whether the |
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financing order: |
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(1) complies with the constitution and laws of this |
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state and the United States; and |
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(2) is within the authority of the railroad commission |
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to issue under this subchapter. |
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(h) The railroad commission shall establish a schedule, |
|
filing requirements, and a procedure for determining the prudence |
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of the costs included in a gas utility's regulatory asset. |
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(i) To the extent a gas utility subject to this subchapter |
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receives insurance proceeds, governmental grants, or other sources |
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of funding that compensate or otherwise reimburse or indemnify the |
|
gas utility for extraordinary costs following the issuance of |
|
customer rate relief bonds, the gas utility may record the amount in |
|
a regulatory liability account and that amount shall be reviewed in |
|
a future proceeding. If an audit conducted under a valid gas |
|
purchase agreement identifies a change of greater than five percent |
|
to the total amount of the gas supply costs incurred during the |
|
event for which regulatory asset recovery was approved, the gas |
|
utility may record the amount in a regulatory asset or regulatory |
|
liability account and that amount shall be reviewed for recovery in |
|
a future proceeding. |
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Sec. 104.366. FINANCING ORDERS AND ISSUANCE OF CUSTOMER |
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RATE RELIEF BONDS. (a) If the railroad commission determines that |
|
customer rate relief bond financing for extraordinary costs is the |
|
most cost-effective method of funding regulatory asset |
|
reimbursements to be made to gas utilities, the railroad |
|
commission, after the final resolution of all applications filed |
|
under Section 104.365, may request the authority to direct an |
|
issuing financing entity to issue customer rate relief bonds. |
|
Before making the request, the railroad commission must issue a |
|
financing order that complies with this section. |
|
(b) To make the determination described by Subsection (a), |
|
the railroad commission must find that the proposed structuring, |
|
expected pricing, and proposed financing costs of the customer rate |
|
relief bonds are reasonably expected to provide benefits to |
|
customers by: |
|
(1) considering customer affordability; and |
|
(2) comparing: |
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(A) the estimated monthly costs to customers |
|
resulting from the issuance of customer rate relief bonds; and |
|
(B) the estimated monthly costs to customers that |
|
would result from the application of conventional recovery methods. |
|
(c) The financing order must: |
|
(1) include a finding that the use of the |
|
securitization financing mechanism is in the public interest and |
|
consistent with the purposes of this subchapter; |
|
(2) detail the total amount of the regulatory asset |
|
determinations to be included in the customer rate relief bond |
|
issuance; |
|
(3) authorize the recovery of any tax obligation of |
|
the gas utilities arising or resulting from: |
|
(A) receipt of customer rate relief bond |
|
proceeds; or |
|
(B) collection or remittance of customer rate |
|
relief charges through the gas utilities' gas cost recovery |
|
mechanism or other means that the railroad commission determines |
|
reasonable; |
|
(4) authorize the issuance of customer rate relief |
|
bonds through an issuing financing entity; |
|
(5) include a statement of: |
|
(A) the aggregated regulatory asset |
|
determination to be included in the principal amount of the |
|
customer rate relief bonds, not to exceed $10 billion for any |
|
separate bond issue; |
|
(B) the maximum scheduled final maturity of the |
|
customer rate relief bonds, not to exceed 30 years, except that the |
|
legal final maturity may be longer based on rating agency and market |
|
considerations; and |
|
(C) the maximum interest rate that the customer |
|
rate relief bonds may bear, not to exceed the maximum net effective |
|
interest rate allowed by law; |
|
(6) provide for the imposition, collection, and |
|
mandatory periodic formulaic adjustment of customer rate relief |
|
charges in accordance with Section 104.370 by all gas utilities and |
|
successors of gas utilities for which a regulatory asset |
|
determination has been made under Section 104.365 to ensure that |
|
the customer rate relief bonds and all related financing costs will |
|
be paid in full and on a timely basis by customer rate relief |
|
charges; |
|
(7) authorize the creation of customer rate relief |
|
property in favor of the issuing financing entity and pledge of |
|
customer rate relief property to the payment of the customer rate |
|
relief bonds; |
|
(8) direct the issuing financing entity to disperse |
|
the proceeds of customer rate relief bonds, net of bond issuance |
|
costs, reserves, and any capitalized interest, to gas utilities for |
|
which a regulatory asset determination has been made under Section |
|
104.365 and include the amounts to be distributed to each |
|
participating gas utility; |
|
(9) provide that customer rate relief charges be |
|
collected and allocated among customers of each gas utility for |
|
which a regulatory determination has been made under Section |
|
104.365 through uniform monthly volumetric charges to be paid by |
|
customers as a component of the gas utility's gas cost or in another |
|
manner that the railroad commission determines reasonable; and |
|
(10) reflect the commitment made by a gas utility |
|
receiving proceeds that the proceeds are in lieu of recovery of |
|
those costs through the regular ratemaking process or other |
|
mechanism to the extent the costs are reimbursed to the gas utility |
|
by customer rate relief bond financing proceeds. |
|
(d) The financing order may provide for a centralized |
|
servicer to coordinate with participating gas utilities who bill |
|
and collect customer rate relief charges and to provide certain |
|
collection and forecast data required for calculating true-up |
|
adjustments. The financing order may not provide for the railroad |
|
commission, the authority, the issuing financing entity, or a |
|
participating utility to act as servicer. |
|
(e) The principal amount determined by the railroad |
|
commission must be increased to include an amount sufficient to: |
|
(1) pay the financing costs associated with the |
|
issuance, including all bond administrative expenses to be paid |
|
from the proceeds of the bonds; |
|
(2) reimburse the authority and the railroad |
|
commission for any costs incurred for the issuance of the customer |
|
rate relief bonds and related bond administrative expenses; |
|
(3) provide for any applicable bond reserve fund; and |
|
(4) capitalize interest for the period determined |
|
necessary by the railroad commission. |
|
(f) The authority, consistent with this subchapter and the |
|
terms of the financing order, shall: |
|
(1) direct an issuing financing entity to issue |
|
customer rate relief bonds at the railroad commission's request, in |
|
accordance with the requirements of Chapter 1232, Government Code, |
|
and other provisions of Title 9, Government Code, that apply to bond |
|
issuance by a state agency; |
|
(2) determine the methods of sale, types of bonds, |
|
bond forms, interest rates, principal amortization, amount of |
|
reserves or capitalized interest, and other terms of the customer |
|
rate relief bonds that in the authority's judgment best achieve the |
|
economic goals of the financing order and effect the financing at |
|
the lowest practicable cost; and |
|
(3) reimburse the railroad commission, the authority, |
|
or any issuing financing entity for bond administrative expenses |
|
and other costs authorized under this subchapter. |
|
(g) To the extent authorized in the applicable financing |
|
order, an issuing financing entity may enter into credit agreements |
|
or ancillary agreements in connection with the issuance of customer |
|
rate relief bonds. |
|
(h) The financing order becomes effective in accordance |
|
with its terms. The financing order, together with the customer |
|
rate relief property and the customer rate relief charges |
|
authorized by the financing order, is irrevocable and not subject |
|
to reduction, impairment, or adjustment by further action of the |
|
railroad commission, except as provided under Subsection (j) and |
|
authorized by Section 104.370. |
|
(i) The railroad commission shall issue a financing order |
|
under this section not later than the 90th day following the date of |
|
the conclusion of all proceedings filed under Section 104.365. |
|
(j) A financing order is not subject to rehearing by the |
|
railroad commission. A financing order may be appealed only to a |
|
Travis County district court by a party to the proceeding. The |
|
appeal must be filed not later than the 15th day after the date the |
|
financing order is signed by the railroad commission. |
|
(k) The judgment of the district court may be reviewed only |
|
by direct appeal to the Supreme Court of Texas. The appeal must be |
|
filed not later than the 15th day after the date of entry of |
|
judgment. |
|
(l) All appeals shall be heard and determined by the |
|
district court and the Supreme Court of Texas as expeditiously as |
|
possible with lawful precedence over other matters. Review on |
|
appeal shall be based solely on the record before the railroad |
|
commission and briefs to the court and is limited to whether the |
|
financing order: |
|
(1) complies with the constitution and laws of this |
|
state and the United States; and |
|
(2) is within the authority of the railroad commission |
|
to issue under this subchapter. |
|
(m) The railroad commission shall transmit a financing |
|
order to the authority after all appeals under this section have |
|
been exhausted. |
|
(n) The authority shall direct an issuing financing entity |
|
to issue customer rate relief bonds as soon as practicable and not |
|
later than the 180th day after receipt of a financing order issued |
|
under this section, except that the authority may cause the |
|
issuance after the 180th day if necessary based on bond market |
|
conditions, the receipt of necessary approvals, and the timely |
|
receipt of necessary financial disclosure information from each |
|
participating gas utility. |
|
(o) The issuing financing entity shall deliver customer |
|
rate relief bond proceeds net of upfront financing costs in |
|
accordance with the applicable financing order. |
|
(p) For the benefit of the authority, the issuing financing |
|
entity, holders of customer rate relief bonds, and all other |
|
financing parties, the railroad commission shall guarantee in a |
|
financing order that the railroad commission will take all actions |
|
in the railroad commission's powers to enforce the provisions of |
|
the financing order to ensure that customer rate relief charge |
|
revenues are sufficient to pay on a timely basis scheduled |
|
principal and interest on the customer rate relief bonds and all |
|
related financing costs and bond administrative expenses. |
|
(q) The railroad commission shall make periodic reports to |
|
the public regarding each financing. |
|
Sec. 104.367. PROPERTY RIGHTS. (a) Customer rate relief |
|
bonds are the limited obligation solely of the issuing financing |
|
entity and are not a debt of a gas utility or a debt or a pledge of |
|
the faith and credit of this state or any political subdivision of |
|
this state. |
|
(b) Customer rate relief bonds are nonrecourse to the credit |
|
or any assets of this state or the authority. A trust fund created |
|
in connection with the issuance of customer rate relief bonds is not |
|
subject to Subtitle B, Title 9, Property Code. |
|
(c) The rights and interests of an issuing financing entity |
|
or the successor under a financing order, including the right to |
|
receive customer rate relief charges authorized in the financing |
|
order, are only contract rights until pledged in connection with |
|
the issuance of the customer rate relief bonds, at which time the |
|
rights and interests become customer rate relief property. |
|
(d) Customer rate relief property created under a financing |
|
order is vested ab initio in the issuing financing entity. Customer |
|
rate relief property constitutes a present property right for |
|
purposes of contracts concerning the sale or pledge of property, |
|
notwithstanding that the imposition and collection of customer rate |
|
relief charges depends on further acts of the gas utility or others |
|
that have not yet occurred. The financing order remains in effect, |
|
and the customer rate relief property continues to exist, for the |
|
same period as the pledge of the state described by Section 104.374. |
|
(e) All revenue and collections resulting from customer |
|
rate relief charges constitute proceeds only of a property right |
|
arising from the financing order. |
|
(f) An amount owed by an issuing financing entity under an |
|
ancillary agreement or a credit agreement is payable from and |
|
secured by a pledge and interest in the customer rate relief |
|
property to the extent provided in the documents evidencing the |
|
ancillary agreement or credit agreement. |
|
Sec. 104.368. PROPERTY INTEREST NOT SUBJECT TO SETOFF, |
|
COUNTERCLAIM, SURCHARGE, OR DEFENSE. The interest of an issuing |
|
financing entity or pledgee in customer rate relief property, |
|
including the revenue and collections arising from customer rate |
|
relief charges, is not subject to setoff, counterclaim, surcharge, |
|
or defense by the gas utility or any other person or in connection |
|
with the bankruptcy of the gas utility, the authority, or any other |
|
entity. A financing order remains in effect and unabated |
|
notwithstanding the bankruptcy of the gas utility, the authority, |
|
an issuing financing entity, or any successor or assignee of the gas |
|
utility, authority, or issuing financing entity. |
|
Sec. 104.369. CUSTOMER RATE RELIEF CHARGES NONBYPASSABLE. |
|
A financing order must include terms ensuring that the imposition |
|
and collection of the customer rate relief charges authorized in |
|
the order are nonbypassable. |
|
Sec. 104.370. TRUE-UP MECHANISM. (a) A financing order |
|
must include a formulaic true-up charge adjustment mechanism that |
|
requires that the customer rate relief charges be reviewed and |
|
adjusted at least annually by the servicer or replacement servicer, |
|
including a subservicer or replacement subservicer, at time periods |
|
and frequencies provided in the financing order, to: |
|
(1) correct any overcollections or undercollections |
|
of the preceding 12 months; and |
|
(2) ensure the expected recovery of amounts sufficient |
|
to provide for the timely payment of customer rate relief bond |
|
principal and interest payments and other financing costs. |
|
(b) True-up charge adjustments must become effective not |
|
later than the 30th day after the date the railroad commission |
|
receives a true-up charge adjustment letter from the servicer or |
|
replacement servicer notifying the railroad commission of the |
|
pending adjustment. |
|
(c) Any administrative review of true-up charge adjustments |
|
must be limited to notifying the servicer of mathematical or |
|
clerical errors in the calculation. The servicer may correct the |
|
error and refile a true-up charge adjustment letter, with the |
|
adjustment becoming effective as soon as practicable but not later |
|
than the 30th day after the date the railroad commission receives |
|
the refiled letter. |
|
Sec. 104.371. SECURITY INTERESTS; ASSIGNMENT; COMMINGLING; |
|
DEFAULT. (a) Customer rate relief property does not constitute an |
|
account or general intangible under Section 9.106, Business & |
|
Commerce Code. The creation, granting, perfection, and enforcement |
|
of liens and security interests in customer rate relief property |
|
that secures customer rate relief bonds are governed by Chapter |
|
1208, Government Code. |
|
(b) The priority of a lien and security interest perfected |
|
under this section is not impaired by any later adjustment of |
|
customer rate relief charges under a mechanism adopted under |
|
Section 104.370 or by the commingling of funds arising from |
|
customer rate relief charges with other funds. Any other security |
|
interest that may apply to those funds is terminated when the funds |
|
are transferred to a segregated account for the issuing financing |
|
entity or a financing party. If customer rate relief property has |
|
been transferred to a trustee or another pledgee of the issuing |
|
financing entity, any proceeds of that property must be held in |
|
trust for the financing party. |
|
(c) If a default or termination occurs under the customer |
|
rate relief bonds, a district court of Travis County, on |
|
application by or on behalf of the financing parties, shall order |
|
the sequestration and payment to the financing parties of revenue |
|
arising from the customer rate relief charges. |
|
Sec. 104.372. BOND PROCEEDS IN TRUST. (a) The issuing |
|
financing entity may deposit proceeds of customer rate relief bonds |
|
issued by the issuing financing entity under this subchapter with a |
|
trustee selected by the issuing financing entity or the proceeds |
|
may be held by the comptroller in a dedicated trust fund outside the |
|
state treasury in the custody of the comptroller. |
|
(b) Bond proceeds, net of the financing costs and reserves |
|
described by Subdivisions (2) and (3), including investment income, |
|
must be held in trust for the exclusive benefit of the railroad |
|
commission's policy of reimbursing gas utility costs and applied in |
|
accordance with the financing order. The issuing financing entity |
|
shall deliver the net proceeds, as provided in the applicable |
|
financing order, to: |
|
(1) reimburse each gas utility the regulatory asset |
|
amount determined to be reasonable for that gas utility in the |
|
financing order; |
|
(2) pay the financing costs of issuing the bonds; and |
|
(3) provide bond reserves or fund any capitalized |
|
interest, as applicable. |
|
(c) On full payment of the customer rate relief bonds and |
|
any related financing costs, any customer rate relief charges or |
|
other amounts held as security for the bonds shall be used to |
|
provide credits to gas utility customers as provided in the |
|
financing order. |
|
Sec. 104.373. REPAYMENT OF CUSTOMER RATE RELIEF BONDS. (a) |
|
As long as any customer rate relief bonds or related financing costs |
|
remain outstanding, uniform monthly volumetric customer rate |
|
relief charges must be paid by all current and future customers that |
|
receive service from a gas utility for which a regulatory asset |
|
determination has been made under Section 104.365. A gas utility |
|
and its successors, assignees, or replacements shall continue to |
|
bill and collect customer rate relief charges from the gas |
|
utility's current and future customers until all customer rate |
|
relief bonds and financing costs are paid in full. |
|
(b) The authority shall report to the railroad commission |
|
the amount of the outstanding customer rate relief bonds issued by |
|
the issuing financing entity under this subchapter and the |
|
estimated amount of annual bond administrative expenses. |
|
(c) All revenue collected from the customer rate relief |
|
charges shall be remitted promptly by the applicable servicers to |
|
the issuing financing entity or the bond trustee for the customer |
|
rate relief bonds to pay bond obligations and ongoing financing |
|
costs, including bond administrative expenses, to ensure timely |
|
payment of bond obligations and financing costs. |
|
(d) Customer rate relief property, including customer rate |
|
relief charges, may be applied only as provided by this subchapter. |
|
(e) Bond obligations are payable only from sources provided |
|
for payment by this subchapter. |
|
Sec. 104.374. PLEDGE OF STATE. (a) Customer rate relief |
|
bonds issued under this subchapter and any related ancillary |
|
agreements or credit agreements are not a debt or pledge of the |
|
faith and credit of this state or a state agency or political |
|
subdivision of this state. A customer rate relief bond, ancillary |
|
agreement, or credit agreement is payable solely from customer rate |
|
relief charges as provided by this subchapter. |
|
(b) Notwithstanding Subsection (a), this state, including |
|
the railroad commission and the authority, pledges for the benefit |
|
and protection of the financing parties and the gas utility that |
|
this state will not take or permit any action that would impair the |
|
value of customer rate relief property, or, except as permitted by |
|
Section 104.370, reduce, alter, or impair the customer rate relief |
|
charges to be imposed, collected, and remitted to financing parties |
|
until the principal, interest and premium, and contracts to be |
|
performed in connection with the related customer rate relief bonds |
|
and financing costs have been paid and performed in full. Each |
|
issuing financing entity shall include this pledge in any |
|
documentation relating to customer rate relief bonds. |
|
(c) Before the date that is two years and one day after the |
|
date that an issuing financing entity no longer has any payment |
|
obligation with respect to customer rate relief bonds, the issuing |
|
financing entity may not wind up or dissolve the financing entity's |
|
operations, may not file a voluntary petition under federal |
|
bankruptcy law, and neither the board of the issuing financing |
|
entity nor any public official nor any organization, entity, or |
|
other person may authorize the issuing financing entity to be or to |
|
become a debtor under federal bankruptcy law during that period. |
|
The state covenants that it will not limit or alter the denial of |
|
authority under this subsection, and the provisions of this |
|
subsection are hereby made a part of the contractual obligation |
|
that is subject to the state pledge made in this section. |
|
Sec. 104.375. TAX EXEMPTION. (a) The sale or purchase of |
|
or revenue derived from services performed in the issuance or |
|
transfer of customer rate relief bonds issued under this subchapter |
|
is exempt from taxation by this state or a political subdivision of |
|
this state. |
|
(b) A gas utility's receipt of customer rate relief charges |
|
is exempt from state and local sales and use taxes and utility gross |
|
receipts taxes and assessments, and is excluded from revenue for |
|
purposes of franchise tax under Section 171.1011, Tax Code. |
|
Sec. 104.376. RECOVERABLE TAX EXPENSE. A tax obligation of |
|
the gas utility arising from receipt of customer rate relief bond |
|
proceeds or from the collection or remittance of customer rate |
|
relief charges is an allowable expense under Section 104.055. |
|
Sec. 104.377. ISSUING FINANCING ENTITY OR FINANCING PARTY |
|
NOT PUBLIC UTILITY. An issuing financing entity or financing party |
|
may not be considered to be a public utility or person providing |
|
natural gas service solely by virtue of the transactions described |
|
by this subchapter. |
|
Sec. 104.378. NO PERSONAL LIABILITY. A commissioner of the |
|
railroad commission, a railroad commission employee, a member of |
|
the board of directors of the authority, an employee of the |
|
authority, or a director, officer, or employee of any issuing |
|
financing entity is not personally liable for a result of an |
|
exercise of a duty or responsibility established under this |
|
subchapter. |
|
Sec. 104.379. CATASTROPHIC WEATHER EVENT STUDY. (a) The |
|
railroad commission shall conduct a study on measures to mitigate |
|
catastrophic weather events, including measures to: |
|
(1) establish natural gas storage capacity to ensure a |
|
reliable gas supply, including location, ownership, and other |
|
pertinent factors regarding gas storage capacity; |
|
(2) assess the advantages and disadvantages of |
|
requiring local distribution companies to use hedging tactics to |
|
avoid volatile customer rates; and |
|
(3) assess the advantages and disadvantages of |
|
prohibiting spot market purchases during a catastrophic weather |
|
event that contribute to volatile customer rates. |
|
(b) Not later than December 1, 2022, the railroad commission |
|
shall report the railroad commission's findings to the governor, |
|
the lieutenant governor, and the speaker of the house of |
|
representatives. |
|
(c) This section expires August 31, 2023. |
|
Sec. 104.380. SEVERABILITY. After the date customer rate |
|
relief bonds are issued under this subchapter, if any provision in |
|
this title or portion of this title or related provisions in Title |
|
9, Government Code, are held to be invalid or are invalidated, |
|
superseded, replaced, repealed, or expire for any reason, that |
|
occurrence does not affect the validity or continuation of this |
|
subchapter or any other provision of this title or related |
|
provisions in Title 9, Government Code, that are relevant to the |
|
issuance, administration, payment, retirement, or refunding of |
|
customer rate relief bonds or to any actions of a gas utility, its |
|
successors, an assignee, a collection agent, or a financing party, |
|
which shall remain in full force and effect. |
|
SECTION 6. 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, 2021. |
|
|
|
______________________________ |
______________________________ |
|
President of the Senate |
Speaker of the House |
|
|
|
I certify that H.B. No. 1520 was passed by the House on April |
|
20, 2021, by the following vote: Yeas 139, Nays 5, 1 present, not |
|
voting; and that the House concurred in Senate amendments to H.B. |
|
No. 1520 on May 28, 2021, by the following vote: Yeas 130, Nays 12, |
|
1 present, not voting. |
|
|
|
______________________________ |
|
Chief Clerk of the House |
|
|
I certify that H.B. No. 1520 was passed by the Senate, with |
|
amendments, on May 26, 2021, by the following vote: Yeas 29, Nays |
|
2. |
|
|
|
______________________________ |
|
Secretary of the Senate |
|
APPROVED: __________________ |
|
Date |
|
|
|
__________________ |
|
Governor |