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CSSB 83: Oppose Unnecessary, Redundant and Prescriptive Requirements Related to Electric Grid Security

 

Overview of CSSB 83 by Hall

CSSB 83 creates an Electromagnetic Threat Preparedness Task Force, comprised of 10 members, to implement programs to address electromagnetic pulse (EMP), geomagnetic disturbance (GMD) and cyber-attack threats to the electric grid.

  • The bill defines “energy critical infrastructure” to include electric generation and transmission & distribution facilities.
  • The task force would identify technical and electronic resources, implement an education program for owners and operators of critical infrastructure, evaluate emergency planning & response procedures and develop a threat recovery plan.
  • The task force would submit findings and recommendation to the governor and legislature by July 1, 2018.

The Governor could instruct an agency to take actions as necessary to implement the threat protection and recovery plan developed by the Electromagnetic Threat Preparedness Task Force.

It also establishes a politically appointed Electric Grid Security Advisory Committee to review the findings of the Electromagnetic Threat Preparedness Task Force and prepare a report of its findings to the Governor, Lt. Governor and Speaker of the House by September 1, 2018.

The bill requires each affected electric company to report vulnerabilities to the Texas Division of Emergency Management by December 31, 2018.

Costs would be recovered through regulatory procedures; for those costs ineligible for traditional cost recovery, the legislature could fund recovery through appropriations of general revenue of Texas.

AECT Concerns

In general, the legislation presupposes that electric companies are not focused on improving grid security and recovery.

  • Electric companies in Texas participate in lead roles at a national level to address the security of the electric grid.
  • National activities include the development of mandatory North American Electric Reliability Council (NERC) standards and close collaboration with the Federal Energy Regulatory Commission (FERC), the U.S. Department of Energy (DOE), the U.S. Department of Homeland security, the National Institute of Standards and Technology and numerous utility based forums.
  • The Electric Power Research Institute (EPRI) and DOE recently released the first phase of a three-year study on this issue, finding a limited thermal impact of an EMP detonation on electric transformers, suggesting the collapse of the electric grid due to an EMP causing widespread failure of transformers is unlikely. There are several more studies to be undertaken as part of the EPRI/DOE project.

GMD has been demonstrated through studies and recent events to be of little to no risk to the ERCOT grid.

The indiscriminate requirements of the bill would incur significant costs – perhaps in the billions of dollars – which would ultimately be borne by all customers, regardless of the mechanism for collecting costs.

 

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CSSB 1976 by Whitmire: Support Identifying Customers Eligible for REPs’ Low-Income Programs

 

Overview of CSSB 1976 by Whitmire

With the expiration of the System Benefit Fund, the statutory basis for future determination of eligibility and treatment of low-income electric customers is unclear.

  • The System Benefit Fund was created in 1999 as part of the advent of electric competition in Texas. The program included electric bill discount to low-income Texans, customer education programs and other benefits to transition to competition.
  • Under PURA 39.903, low-income customers are identified using information from the Health and Human Services Commission (HHSC), which is provided to the Public Utility Commission of Texas (PUC), to create a list of low-income electric customers. That section will expire on August 31, 2017.

CSSB 1976 will reinstate the ability for the HHSC to coordinate with the PUC to populate a list of customers that meet the eligibility criteria, provided one or more retail electric provider (REP) requests that the list be developed by July 31 of the previous fiscal year.

  • The REP or REPs that voluntarily request the list would agree to reimburse the PUC for the cost of developing the list.

CSSB 1976 will allow REPs to continue to provide benefits to low-income customers

Without this bill, there will be no fair or consistent method to identify low-income electric customers to whom REPs could offer services that specifically benefit low-income Texans on a competitive basis.

The bill would simply allow the PUC to continue to coordinate with DHHS to have the same list of customers they had in the past, so REPs can offer services that are tailored to specific customer needs.

As substituted, CSSB 1976 will have no fiscal impact to the state.

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CSSB 735 by Hancock: Support Revisions to PUC Ratemaking Oversight of Electric Utilities

 

Overview of CSSB 735 by Hancock

  • Requires the Public Utility Commission of Texas (PUC) to establish a schedule requiring periodic rate cases for electric utilities. Provides the PUC the ability to extend the date for good cause.
  • Eliminates the sunset date on the distribution cost recovery factor (DCRF) as recommended by the PUC, which has been used by electric utilities to more efficiently recover its investment in infrastructure.
  • Removes the four-time limit on an ERCOT utility’s use of the DCRF between rate cases. ERCOT utilities would be allowed to utilize the DCRF only once per year.
  • Extends the time available to the PUC to evaluate a sale, transfer or merger of a utility under its purview by 60 days beyond current statute limitations.

AECT Supports Ratemaking Approaches that Promote a Reliable, Cost-Effective Electric System

  • Efficient ratemaking allows for the timely recovery of the costs of critical investments made to meet the demands of a growing economy and to replace aging infrastructure.
  • The DCRF mechanism has been used several times by electric utilities to more efficiently recover costs over the six years since it was enacted by SB 1693 in 2011, and the PUC recommended its continued use in its 2017 Scope of Competition Report.

Click here to download a PDF of this issue paper

HB 2576 by S. Thompson: Support Revisions to PUC Ratemaking Oversight of Electric Utilities

 

Overview of HB 2576 by S. Thompson

  • HB 2576 eliminates the sunset date on the distribution cost recovery factor (DCRF) mechanism, as recommended by the Public Utility Commission of Texas (PUC).
  • The DCRF mechanism was created following the passage of SB 1693 in 2011, which Rep. Thompson sponsored in the House.
  • The expiration date for the DCRF mechanism was extended from January 31, 2017, to September 1, 2019, with the passage of SB 774 in 2015. SB 774 also required the PUC to study alternative ratemaking mechanisms adopted by other states; that study was completed and reported to the Legislature in January 2017.
  • HB 2576 also removes from code two outdated studies related to alternative ratemaking, including the study included in SB 774.

AECT Supports Ratemaking Approaches that Promote a Reliable, Cost-Effective Electric System

  • AECT supports all forms of efficient rate-making, including the reduction of rate case expenses.
  • Efficient ratemaking allows for the timely recovery of the costs of critical investments made to meet the demands of a growing economy and to replace aging infrastructure.
  • The DCRF has been used several times by electric utilities to more efficiently recover costs over the six years since SB 1693 was enacted in 2011.

Click here to download a PDF of this issue paper

HB 2235 by Murphy: Support Clarification of Utility Accounting Based on Change in GAAP

 

Overview of HB 2235 by Murphy

  • The Financial Accounting Standards Board (FASB) sets generally accepted accounting principles (GAAP) required to be followed by U.S. companies filing financial statements with the SEC.
  • FASB is adopting a change in the presentation (not calculation) of retirement benefit costs.
  • The change is intended to promote ease of financial analysis by the investor community.
  • FASB has acknowledged this change has national implications in the utility sector, and has left it to be addressed at the individual state level or at the Federal Energy Regulatory Commission.
  • This change in presentation in no way affects the amount of pension costs to be included in rates.

AECT Supports Retaining the Current Regulatory Treatment of Retirement Benefits

  • HB 2235 removes one word (“operating”) in two places within PURA 36.065(b).
  • This aligns PURA with FASB, preserving the current regulatory treatment of retirement benefits relied on by more than 10,000 Texans.
  • HB 2235 does not impact electric rates, and all required ratepayer protections remain in place.

Click here to download a PDF of this issue paper

The AECT App

In order to better communicate with legislators, staffers and electric industry professionals in Texas, we’ve launched an app. Simply named after our organization, the AECT App provides easy access to our most recent issue papers, as well as occasional high-priority updates on key legislation.

Download it using a link below, or visit the Apple or Android store and search AECT!

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SB 947: Support Allowing Electric Utilities to Open Land for Recreational Purposes

 

Overview of SB 947 by Kolkhorst

  • SB 947 is designed to open utility land for recreational use by reducing the liability for utilities that allow land the utility owns, occupies or leases to be used for recreational purposes.
  • Current law allows this use of utility land in Harris County and El Paso County. SB 947 would provide similar liability protections to utilities statewide.

SB 947 is an Effective Way to Increase Recreational Space in Texas

  • SB 947 will increase the amount of recreational space in cities and neighborhoods, thereby adding to the overall beautification of the state.
  • Utilities have through ownership or leasehold substantial unimproved land holdings. However, many utility companies have a long-standing practice of restricting the use of their land by the public to limit the risk to lawsuits resulting from public use of its property.
  • The protections provided by SB 947 are necessary, because utilities granting recreational activity licenses would be exposed to greater risk of litigation since the public would be using utility property and coming in closer proximity to power lines under the bill.

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SB 736: Support Leveling the Playing Field for Electric Power Sales by Removing GLO Involvement

 

Overview of SB 736 by Hancock

  • The Texas General Land Office (GLO) sells natural gas and electricity on the competitive market to public entities through its State Power Program.
  • The program was authorized in 1999, as part of Senate Bill 7, which created the competitive retail electric market in ERCOT.
  • The State Power Program provides electricity to its customers through a third-party retail electric provider (REP).
  • SB 736 would eliminate the electricity sales portion of the State Power Program currently granted under Section 35.102 of the Utilities Code. GLO would continue to sell natural gas to public entities.

SB 736 Eliminates the Distortion of Direct Government Involvement in the Competitive Electric Market

  • SB 736 opens the process for all REPs to offer the competitive bids in the retail electric market.
  • Texas’ competitive electric market opened in 2002, and now has dozens of marketers that serve public entities, ensuring the free market brings competitive bids to these entities.
  • It assures taxpayer dollars are expended efficiently, thanks to the strength of Texas’ competitive electric market.

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SB 559: Support Removing Ambiguity from Gross Receipts Tax Code

 

Overview of SB 559 by Hancock

  • SB 559 strikes the word “local” from several portions of Section 182 of the Tax Code to clarify that a seller of utility services, such as a retail electric provider (REP) is subject to the tax, even if the seller is not physically located in the market it serves.

AECT Supports SB 559

  • This legislation reflects the way the tax is presently assessed, and removed unnecessary ambiguity from the Tax Code.

Click here to download a PDF of this issue paper