H.B. No. 1510

	AN ACT
	relating to the response and resilience of certain electricity
	service providers to major weather-related events or other natural
	disasters; granting authority to issue bonds.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Section 36.402(a), Utilities Code, is amended to
	read as follows:
	(a)  In this subchapter, "system restoration costs" means
	reasonable and necessary costs, including costs expensed, charged
	to self-insurance reserves, deferred, capitalized, or otherwise
	financed, that are incurred by an electric utility due to any
	activity or activities conducted by or on behalf of the electric
	utility in connection with the restoration of service and
	infrastructure associated with electric power outages affecting
	customers of the electric utility as the result of any tropical
	storm or hurricane, ice or snow storm, flood, or other
	weather-related event or natural disaster that occurred in calendar
	year 2008 or thereafter. System restoration costs include
	mobilization, staging, and construction, reconstruction,
	replacement, or repair of electric generation, transmission,
	distribution, or general plant facilities. System restoration
	costs shall include reasonable estimates of the costs of an
	activity or activities conducted or expected to be conducted by or
	on behalf of the electric utility in connection with the
	restoration of service or infrastructure associated with electric
	power outages, but such estimates shall be subject to true-up and
	reconciliation after the actual costs are known. System restoration
	costs include reasonable and necessary weatherization and
	storm-hardening costs incurred, as well as reasonable estimates of
	costs to be incurred, by the electric utility, but such estimates
	shall be subject to true-up and reconciliation after the actual
	costs are known.
	SECTION 2.  Chapter 36, Utilities Code, is amended by adding
	Subchapter J to read as follows:
	SUBCHAPTER J. LOWER-COST FINANCING MECHANISM FOR SECURITIZATION
	FOR RECOVERY OF SYSTEM RESTORATION COSTS
	Sec. 36.451.  PURPOSE AND APPLICABILITY. (a) Except as
	otherwise specifically provided by this subchapter, the same
	procedures, standards, and protections for securitization
	authorized by Subchapter I of this chapter and, to the extent made
	applicable to Subchapter I of this chapter, by Subchapter G,
	Chapter 39, apply to the lower-cost financing mechanism for
	securitization of transition costs or system restoration costs as
	provided by Subchapter I. To the extent of any conflict between the
	provisions of this subchapter and Subchapter I of this chapter or,
	to the extent made applicable by Subchapter I of this chapter,
	Subchapter G, Chapter 39, in cases involving the securitization of
	system restoration costs under this subchapter, the provisions of
	this subchapter control.
	(b)  The purpose of this subchapter is to make available a
	lower-cost, supplemental financing mechanism to allow an electric
	utility operating solely outside of ERCOT to obtain timely recovery
	of system restoration costs under Subchapter I through
	securitization and the issuance of transition bonds or system
	restoration bonds by an issuer other than the electric utility or an
	affiliated special purpose entity. Financing of system restoration
	costs under this subchapter is a valid and essential public
	purpose.
	(c)  The Texas Electric Utility System Restoration
	Corporation is created under this subchapter as a special purpose
	public corporation and instrumentality of the state for the
	essential public purpose of providing a lower-cost, supplemental
	financing mechanism available to the commission and an electric
	utility to attract low-cost capital to finance system restoration
	costs.
	(d)  In approving securitization under this subchapter, the
	commission shall ensure that customers are not harmed as a result of
	any financing through the Texas Electric Utility System Restoration
	Corporation and that any financial savings or other benefits are
	appropriately reflected in customer rates.
	(e)  System restoration bonds issued under this subchapter
	will be solely the obligation of the issuer and the corporation as
	borrower, if applicable, and will not be a debt of or a pledge of the
	faith and credit of the state.
	(f)  System restoration bonds issued under this subchapter
	shall be nonrecourse to the credit or any assets of the state and
	the commission.
	(g)  This subchapter does not limit or impair the
	commission's jurisdiction under this title to regulate the rates
	charged and the services rendered by electric utilities in this
	state.
	(h)  An electric utility receiving the proceeds of
	securitization financing under this subchapter is not required to
	provide utility services to the corporation or the state as a result
	of receiving such proceeds except in the role of the corporation or
	the state as a customer of the electric utility. This subchapter
	does not create an obligation of the corporation or an issuer to
	provide electric services to the electric utility or its customers.
	Sec. 36.452.  DEFINITIONS. (a) In this subchapter:
	(1)  "Corporation" means the Texas Electric Utility
	System Restoration Corporation.
	(2)  "Issuer" means the corporation or any other
	corporation, public trust, public instrumentality, or entity that
	issues system restoration bonds approved by a financing order.
	(b)  For the purposes of this subchapter, "qualified costs,"
	as defined by Section 39.302 and as used in Subchapter G, Chapter
	39, also includes all costs of establishing, maintaining, and
	operating the corporation and all costs of the corporation and an
	issuer in connection with the issuance and servicing of the system
	restoration bonds, all as approved in the financing order.
	(c)  Except as otherwise specifically provided by this
	subchapter, any defined terms provided by Subchapter I of this
	chapter and, if made applicable by Subchapter I of this chapter,
	Subchapter G, Chapter 39, have the same meaning in this subchapter.
	Sec. 36.453.  CREATION OF CORPORATION. (a) The corporation
	is a nonprofit corporation and instrumentality of the state, and
	shall perform the essential governmental function of financing
	system restoration costs in accordance with this subchapter. The
	corporation:
	(1)  shall perform only functions consistent with this
	subchapter;
	(2)  shall exercise its powers through a governing
	board;
	(3)  is subject to the regulation of the commission;
	and
	(4)  has a legal existence as a public corporate body
	and instrumentality of the state separate and distinct from the
	state.
	(b)  Assets of the corporation may not be considered part of
	any state fund. The state may not budget for or provide any state
	money to the corporation. The debts, claims, obligations, and
	liabilities of the corporation may not be considered to be a debt of
	the state or a pledge of its credit.
	(c)  The corporation must be self-funded. Before the
	imposition of transition charges or system restoration charges, the
	corporation may accept and expend for its operating expenses money
	that may be received from any source, including financing
	agreements with the state, a commercial bank, or another entity to:
	(1)  finance the corporation's obligations until the
	corporation receives sufficient transition property to cover its
	operating expenses as financing costs; and
	(2)  repay any short-term borrowing under any such
	financing agreements.
	(d)  The corporation has the powers, rights, and privileges
	provided for a corporation organized under Chapter 22, Business
	Organizations Code, subject to the express exceptions and
	limitations provided by this subchapter.
	(e)  An organizer selected by the executive director of the
	commission shall prepare the certificate of formation of the
	corporation under Chapters 3 and 22, Business Organizations Code.
	The certificate of formation must be consistent with the provisions
	of this subchapter.
	(f)  State officers and agencies are authorized to render
	services to the corporation, within their respective functions, as
	may be requested by the commission or the corporation.
	(g)  The corporation or an issuer may:
	(1)  retain professionals, financial advisors, and
	accountants the corporation or issuer considers necessary to
	fulfill the corporation's or issuer's duties under this subchapter;
	and
	(2)  determine the duties and compensation of a person
	retained under Subdivision (1), subject to the approval of the
	commission.
	(h)  The corporation is governed by a board of five directors
	appointed by the commission for two-year terms.
	(i)  An official action of the board requires the favorable
	vote of a majority of the directors present and voting at a meeting
	of the board.
	Sec. 36.454.  POWERS AND DUTIES OF CORPORATION. (a) The
	corporation, in each instance subject to the prior authorization of
	the commission, shall participate in the financial transactions
	authorized by this subchapter. The corporation may not engage in
	business activities except those activities provided for in this
	subchapter and those ancillary and incidental thereto. The
	corporation or an issuer may not apply proceeds of system
	restoration bonds or system restoration charges to a purpose not
	specified in a financing order, to a purpose in an amount that
	exceeds the amount allowed for such purpose in the order, or to a
	purpose in contravention of the order.
	(b)  The board of the corporation, under the provisions of
	this subchapter, may employ or retain persons as are necessary to
	perform the duties of the corporation.
	(c)  The corporation may:
	(1)  acquire, sell, pledge, or transfer transition
	property as necessary to effect the purposes of this subchapter
	and, in connection with the action, agree to such terms and
	conditions as the corporation deems necessary and proper,
	consistent with the terms of a financing order:
	(A)  to acquire transition property and to pledge
	such transition property, and any other collateral:
	(i)  to secure payment of system restoration
	bonds issued by the corporation, together with payment of any other
	qualified costs; or
	(ii)  to secure repayment of any borrowing
	from any other issuer of system restoration bonds; or
	(B)  to sell the transition property to another
	issuer, which may in turn pledge that transition property, together
	with any other collateral, to the repayment of system restoration
	bonds issued by the issuer together with any other qualified costs;
	(2)  issue system restoration bonds on terms and
	conditions consistent with a financing order;
	(3)  borrow funds from an issuer of system restoration
	bonds to acquire transition property, and pledge that transition
	property to the repayment of any borrowing from an issuer, together
	with any related qualified costs, all on terms and conditions
	consistent with a financing order;
	(4)  sue or be sued in its corporate name;
	(5)  intervene as a party before the commission or any
	court in this state in any matter involving the corporation's
	powers and duties;
	(6)  negotiate and become a party to contracts as
	necessary, convenient, or desirable to carry out the purposes of
	this subchapter; and
	(7)  engage in corporate actions or undertakings that
	are permitted for nonprofit corporations in this state and that are
	not prohibited by, or contrary to, this subchapter.
	(d)  The corporation shall maintain separate accounts and
	records relating to each electric utility that collects system
	restoration charges for all charges, revenues, assets,
	liabilities, and expenses relating to that utility's related system
	restoration bond issuances.
	(e)  The board of the corporation may not authorize any
	rehabilitation, liquidation, or dissolution of the corporation and
	a rehabilitation, liquidation, or dissolution of the corporation
	may not take effect as long as any system restoration bonds are
	outstanding unless adequate protection and provision have been made
	for the payment of the bonds pursuant to the documents authorizing
	the issuance of the bonds. In the event of any rehabilitation,
	liquidation, or dissolution, the assets of the corporation must be
	applied first to pay all debts, liabilities, and obligations of the
	corporation, including the establishment of reasonable reserves
	for any contingent liabilities or obligations, and all remaining
	funds of the corporation must be applied and distributed as
	provided by an order of the commission.
	(f)  Before the date that is two years and one day after the
	date that the corporation no longer has any payment obligation with
	respect to any system restoration bonds, including any obligation
	to an issuer of any system restoration bonds outstanding, the
	corporation may not file a voluntary petition under federal
	bankruptcy law and neither any public official nor any
	organization, entity, or other person may authorize the corporation
	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 or Subsection (e), and
	the provisions of this subsection and Subsection (e) are hereby
	made a part of the contractual obligation that is subject to the
	state pledge set forth in Section 39.310.
	(g)  The corporation shall prepare and submit to the
	commission for approval an annual operating budget. If requested by
	the commission, the corporation shall prepare and submit an annual
	report containing the annual operating and financial statements of
	the corporation and any other appropriate information.
	Sec. 36.455.  COMMISSION REGULATION OF CORPORATION. The
	commission shall regulate the corporation as provided by this
	subchapter and consistent with the manner in which it regulates
	public utilities. Notwithstanding the regulation authorized by
	this section, the corporation is not a public utility.
	Sec. 36.456.  FINANCING ORDER. (a) This section applies to
	the commission's issuance of a financing order under this
	subchapter.
	(b)  Except as otherwise specifically provided by this
	subchapter, the provisions of Subchapter I of this chapter and, to
	the extent made applicable to Subchapter I of this chapter,
	Subchapter G, Chapter 39, that address the commission's issuance of
	a financing order apply to the commission's issuance of a financing
	order under this subchapter.
	(c)  The corporation and any issuer must be a party to the
	commission's proceedings that address the issuance of a financing
	order along with the relevant electric utility.
	(d)  In addition to the requirements of Subchapter I, as
	applicable, a financing order issued under this subchapter must:
	(1)  require the sale, assignment, or other transfer to
	the corporation of certain specified transition property created by
	the financing order in the manner contemplated by Section 39.308,
	and, following that sale, assignment, or transfer, require that
	system restoration charges paid under any financing order be
	created, assessed, and collected as the property of the
	corporation, subject to subsequent sale, assignment, or transfer by
	the corporation as authorized under this subchapter;
	(2)  authorize:
	(A)  the issuance of system restoration bonds by
	the corporation secured by a pledge of specified transition
	property, and the application of the proceeds of those system
	restoration bonds, net of issuance costs, to the acquisition of the
	transition property from the electric utility; or
	(B)  the acquisition of specified transition
	property from the electric utility by the corporation financed:
	(i)  by a loan by an issuer to the
	corporation of the proceeds of system restoration bonds, net of
	issuance costs, secured by a pledge of the specified transition
	property; or
	(ii)  by the acquisition by an issuer from
	the corporation of the transition property financed from the net
	proceeds of transition bonds issued by the issuer; and
	(3)  authorize the electric utility to serve as
	collection agent to collect the system restoration charges and
	transfer the collected charges to the corporation, the issuer, or a
	financing party, as appropriate.
	(e)  After issuance of the financing order, the corporation
	shall arrange for the issuance of system restoration bonds as
	specified in the financing order by it or another issuer selected by
	the corporation and approved by the commission.
	(f)  System restoration bonds issued pursuant to a financing
	order under this section are secured only by the related transition
	property and any other funds pledged under the bond documents. No
	assets of the state or electric utility are subject to claims by
	such bondholders. Notwithstanding the provisions of Subchapter G,
	Chapter 39, following assignment of the transition property, the
	electric utility does not have any beneficial interest or claim of
	right in such system restoration charges or in any transition
	property.
	Sec. 36.457.  SEVERABILITY. Effective on the date the first
	system restoration bonds associated with system restoration costs
	are issued under this subchapter, if any provision in this title or
	portion of this title is held to be invalid or is invalidated,
	superseded, replaced, repealed, or expires for any reason, that
	occurrence does not affect the validity or continuation of this
	subchapter, Subchapter I of this chapter, as that subchapter
	applies to this subchapter, Subchapter G, Chapter 39, as that
	subchapter applies to this subchapter, or any part of those
	provisions, or any other provision of this title that is relevant to
	the issuance, administration, payment, retirement, or refunding of
	system restoration bonds or to any actions of the electric utility,
	its successors, an assignee, a collection agent, the corporation,
	an issuer, or a financing party, and those provisions shall remain
	in full force and effect.
	SECTION 3.  Section 37.056(c), Utilities Code, is amended to
	read as follows:
	(c)  The commission shall grant each certificate on a
	nondiscriminatory basis after considering:
	(1)  the adequacy of existing service;
	(2)  the need for additional service;
	(3)  the effect of granting the certificate on the
	recipient of the certificate and any electric utility serving the
	proximate area; and
	(4)  other factors, such as:
	(A)  community values;
	(B)  recreational and park areas;
	(C)  historical and aesthetic values;
	(D)  environmental integrity;
	(E)  the probable improvement of service or
	lowering of cost to consumers in the area if the certificate is
	granted, including any potential economic or reliability benefits
	associated with dual fuel and fuel storage capabilities in areas
	outside the ERCOT power region; and
	(F)  to the extent applicable, the effect of
	granting the certificate on the ability of this state to meet the
	goal established by Section 39.904(a) of this title.
	SECTION 4.  Section 37.058, Utilities Code, is amended by
	adding Subsection (e) to read as follows:
	(e)  Notwithstanding any other provision of this title, an
	electric utility operating solely outside of the ERCOT power region
	may, but shall not be required to, obtain a certificate to install,
	own, or operate a generation facility with a capacity of 10
	megawatts or less.
	SECTION 5.  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. 1510 was passed by the House on April
	20, 2021, by the following vote:  Yeas 145, Nays 0, 1 present, not
	voting.
	______________________________
	Chief Clerk of the House
	I certify that H.B. No. 1510 was passed by the Senate on May
	19, 2021, by the following vote:  Yeas 31, Nays 0.
	______________________________
	Secretary of the Senate
	APPROVED:  _____________________
	Date
	_____________________
	Governor