Category Archives: 84th Texas Legislature

HB 1926: Support Fraser on the Senate Floor

 

HB 1926 by Kacal (Sp: Fraser) – Relating to the governance of certain municipal power agencies.

 

Proposal

  • HB 1926 requires all municipally-owned utilities, if building transmission outside of their traditional service territory, to seek a certificate of convenience & necessity (CCN) through the PUC and follow the same routing process as any other electric utility.
  • The bill also continues the Texas Municipal Power Agency (TMPA), a collective of municipally-owned utilities that includes Bryan, Denton, Garland and Greenville.

 

Discussion

  • AECT supports HB 1926, as the bill ensures a level playing field for all utilities building transmission in Texas.

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Click here to download a PDF of this issue paper.

 

CSSB 513 and CSHB 2187: Support Adopting Key Measures to Reduce Metal Theft

 

CSSB 513 by Taylor – Relating to the regulation of metal recycling entities; imposing an administrative penalty

CSHB 2187 by Smith – Relating to the regulation of metal recycling entities; imposing an administrative penalty; amending provisions subject to a criminal penalty

 

Key Proposals

  • Under CSSB 513/CSHB 2187, payment for regulated metals would be made by check, money order, direct deposit, or by cash when using an approved “cash transaction card.”
  • The “cash transaction card” would initially be mailed to the seller, establishing the seller’s address and other identifying information. Once the seller has received the “cash transaction card,” they may receive cash fo r sales of regulated metals.
  • CSSB 513/CSHB 2187 adds lead batteries and power inverters to the list of regulated metals.
  • The bill also adds two Sheriffs to the metal recycling advisory committee.

 

AECT Strongly Supports Efforts to Curb Metal Theft

  • Metal theft has become a major problem for many Texas communities.
  • The cost of repairing and replacing the stolen property is far greater than just the nominal value of the metal itself.
  • If a metal theft causes a power outage, the loss is multiplied by the lost business of all of the affected customers.
  • Injuries or fatalities caused by the unsafe conditions created by the theft add additional costs from medical treatment and civil lawsuits. Moreover, the unsafe conditions create a public safety hazard and dangerous working conditions for utility employees due to the extreme hazard of ungrounded high voltage equipment.
  • Cash transactions related to metal theft may also create a loss of income for the state because unregistered businesses are not documenting the transactions.

Click here to download a PDF of this issue paper

HB 1101: Support Ensuring Remaining System Benefit Fund Balance is Disbursed to Eligible Customers

 

HB 1101 by Sylvester Turner – Relating to extending the period over which the balance of the system benefit fund is to be eliminated

AECT Position: Support

 

Proposal

HB 1101 would allow the PUC to use the remaining balance of the System Benefit Fund (SBF) for its intended purpose by extending funding for a low-income discount for eligible customers in the competitive electric market through August 2017.

  • In September 2015 and May through August 2016, low-income customers would receive up to a 33 percent discount off their electric bills.
  • For the months of September 2016 and May through August 2017, the low-income discount rate will be set by the PUC at a level to fully use the remaining SBF balance.

 

AECT Supports the Use of the SBF Balance for a Low-Income Discount

AECT has long supported the use of the SBF for its primary purpose: to provide assistance to low-income electric customers

  • The SBF initially provided funding for a year-round rate discount of 10-20 percent, as well as for energy efficiency and customer education. The discount was suspended in 2005. Beginning 2007, the discount was reinstated for the months of May-September only at a rate set by the PUC.
  • The fees that funded the SBF were typically greater than the annual expenditures on the low-income discount. The 83rd Legislature decided to discontinue collection of the SBF fees, and sunset the low-income discount using the SBF’s accumulated balance to fund it through August 2016.
  • Below-average summer temperatures and lower-than-expected enrollments resulted in significantly lower SBF expenditures and concern that the low-income discount may not fully utilize the remaining SBF funds before sunsetting in August 2016.
  • The SBF balance is currently projected to be about $247 million when the program expires in September 2016. HB 1101 would intend to use the entirety of the fund, concluding the SBF program.

Click here to download a PDF of this issue paper

SB 1122: Support Ensuring Texas Power Plants and Mines Maintain Access to Groundwater

 

SB 1122 by Estes – Relating to a limitation on the authority to curtail groundwater production from wells used for power generation or mining.

AECT Position: Support

 

Proposal

  • SB 1122 amends the Texas Water Code to ensure that permitted or historic use of groundwater that supports a power plant or its associated mine cannot be curtailed by a groundwater conservation district (GCD).

 

AECT Discussion

  • This bill serves one purpose: to promote a sufficient supply of electricity by protecting the historic use of groundwater by power plants and associated mines.
  • Power plants use groundwater for very limited uses: to ensure boiler water remains at a constant level; provide potable water for employees; and maintain fire protection systems.
  • Mines pump groundwater to enable safe excavation of the soil, control dust, dewater mines to ensure mines are not caved in, and to provide potable water for employees.
  • Power plants and mines require sustained access to groundwater, as they are frequently located well outside municipal water systems.
  • While power plant and mine access to groundwater is critically important, the total amount of groundwater used is very small.
  • Statewide, the groundwater pumped for power and mining use in 2012 was only 1.6% of all groundwater pumped. That is a small percentage of the total groundwater pumped in Texas.
  • Yet that access to groundwater is vital to the continued operation of power plants and mines, ensuring reliable electricity for the customers they serve.

SB 1122 will promote continued electric reliability by prohibiting curtailment of groundwater.

Click here to download a PDF of this issue paper.

 

Legislation to Enact Recommendations Included in the PUC’s “2015 Scope of Competition in Electric Markets in Texas”

 

SB 734 by Fraser – Relating to the setting of annual interest rates for utility deposits by the PUC (PUC Recommendation H.3)
AECT Position: Support

  •  SB 734 allows the PUC to set the rate of interest for the next calendar year on electric company deposits “on or before each December 1,” rather than specifically on December 1 or the next regular workday following December 1. SB 734 simply provides the PUC additional flexibility for when it sets annual interest rates for utility deposits.

SB 774 by Fraser – Relating to a study on periodic rate adjustment by electric utilities (PUC Recommendation H.2)
AECT Position: Support as Amended

  • As amended, SB 774 will reauthorize the 2011 Periodic Rate Adjustment (PRA) bill. The 2011 PRA bill is set to expire in January 2017. Under SB 774, the bill will expire on September 1, 2019. This ensures that the PRA mechanism will be available for use through the next two legislative sessions.
  • The bill revises the scope of a PUC report included in the 2011 PRA bill to more broadly study formula rate plans and other modernized ratemaking mechanisms. The report must be sent to the legislature on January 31, 2017.

SB 775 by Fraser- Relating to the repeal of the goal for natural gas use (PUC Recommendation E.1)
AECT Position: Support

  • Sec. 39.9044 of the Utilities Code requires at least 50 percent of non-renewable electric generation in Texas be fueled by natural gas. SB 775 removes this section.
  • The vast majority of non-renewable electric generation installed since Sec. 39.9044 was adopted in 1999 has been natural gas-fired, rendering Sec. 39.9044 unnecessary.

SB 776 by Fraser – Relating to the authority of the PUC to approve certain transmission facilities constructed by a municipally owned utility (PUC Recommendation B.3)
AECT Position: Amend

  • SB 776 requires a municipally-owned utility to obtain a certificate of convenience and necessity (CCN) before building transmission facilities outside its certificated service area.
  • SB 776 includes a standard for municipally-owned utilities that’s different from the standard for investor-owned utilities. AECT supports amending the legislation to ensure a level playing field for all utilities.

SB 777 by Fraser – Relating to the authority of the Public Utility Commission of Texas to restrict participation in the retail electric market for significant violations (PUC Recommendation A)
AECT Position: Support as Amended

  • AECT supports the concept of SB 777. The bill should be amended to clarify that the ban is on the individual who the PUC has sought action against. As filed, the text could be interpreted as creating an administrative burden on (and risk to) well-behaved REPs to ensure that a blacklisted individual is not in their employ. The filed language also implicitly allows employment of the blacklisted individual by other customer-impacting market participants.

SB 931 by Fraser – Relating to the goal for renewable energy and competitive renewable energy zones (PUC Recommendations B.1 and E.2)
AECT Position: Neutral

  • The Competitive Renewable Energy Zone (CREZ) project was completed in 2013. SB 931 would clarify that future proposed transmission projects, even those located in the CREZ, must meet the same adequacy and need criteria as non-CREZ transmission lines.
  • Texas’ renewable portfolio standard (RPS) set a mandate that at least 5,880 MW of renewable generation should be installed in Texas by 2025. The state currently has over 12,000 MW of renewable generation online, making the mandate unnecessary. SB 931 removes the goal from statute; it retains the renewable energy credit (REC) trading program.

SB 932 by Fraser – Relating to the authority of the PUC to retain assistance for federal proceedings affecting certain electric utilities and consumers (PUC Recommendation C)
AECT Position: Support

  • SB 932 would allow the PUC to hire assistance for federal proceedings in areas located outside the ERCOT grid. These utilities are regulated by FERC, in addition to the PUC.
  • It is appropriate for the PUC to have resources available to participate in these cases, which often require specialized knowledge of FERC.

 SB 933 by Fraser – Relating to Relating to the authority of the PUC to review transmission interconnections that enable imports or exports from the ERCOT power grid (PUC Recommendation B.2)
AECT Position: No Position 

  • SB 933 would require any interconnection between the ERCOT transmission grid and a neighboring grid to be approved by the PUC and found in the public interest.
  • This ensures the PUC can formally assess the impact of an interconnection between power markets.

Click here to download a PDF of this issue paper.

SB 774 by Fraser: Reauthorization of the Periodic Rate Adjustment Mechanism

AECT Position: Support as Amended

Proposal

  • SB 774 will reauthorize the 2011 Periodic Rate Adjustment (PRA) bill, continuing the PUC’s current authority to create a fair, appropriate and timely process for recovery of distribution investments in ERCOT.
  • The 2011 PRA bill is set to expire in January 2017. Under SB 774, the bill will expire on September 1, 2019. This ensures that the PRA mechanism will be available for use through the next two legislative sessions.
  • As amended, SB 774 revises the scope of a PUC report included in the 2011 PRA bill to more broadly study formula rate plans and other modernized ratemaking mechanisms. The report must be sent to the legislature on January 15, 2017.

AECT Discussion

  • The existing PRA statute, which included input from all stakeholders and would remain substantively unchanged by the 2015 PRA bill, received overwhelming support. The bill was passed in the 2011 legislative session by a vote of 143 – 5 in the House of Representatives and 30-1 in the Senate.
  • The concept behind the PRA mechanism is not new. It applies a conceptually similar rate adjustment mechanism to distribution investment that has successfully worked for electric transmission for more than a decade.
  • SB 774 encourages investments that will modernize existing distribution grids in ERCOT, make them more resilient and better able to support new products and technologies.

Questions & Answers on SB 774

Has the PRA been used?
After the statute became effective in 2011, stakeholders fully participated in two projects at the PUC to further develop a rule and administrative processes to implement the statute. The first PRA proceeding was initiated in 2014, and additional PRA proceedings are expected in 2015.

Why was the PRA set to sunset in 2017?
The purpose of placing a 2017 sunset date on the PRA statute was for the PUC to gain material experience with the mechanism, advise the legislature on that experience and allow the legislature to determine what next steps are appropriate. Extending the PRA this session will allow the PUC to gain the required experience. This extension should occur now, as the PRA would otherwise expire in January 2017.

Does the PRA reduce regulatory oversight or stakeholder processes?
No. The PRA balances the benefits of timely recovery of these typically non-controversial utility investments with the need to review the appropriateness of these investments It also expressly leaves unchanged the rights of cities with original jurisdiction to examine proposed rate adjustments.

Click here to download a PDF of this issue paper.

SB 841 by Creighton/HB 1535 by Frullo: Detailed Explanation of Proposed Legislative Changes

 

Allow more flexible post-test year adjustments
Under current law, a utility is allowed to recover its authorized rate of return through rates charged to customers, with rates determined by the PUC. Rates are based on a utility’s revenues, expenses and net plant investment, which comprise the “rate base.” The PUC uses a “historic test year,” a twelve month historic period ending on a calendar quarter, to determine a utility’s rate base. Except in very limited circumstances, rate base only includes plant investment that is completed and operating prior to the end of the test year. Under the current regulatory structure, this results in a minimum one-year lag between the completion of new plant investment and its inclusion in rates. Further compounding the problem is investment placed into service after the end of the historic test year. The result is regulatory lag lasting much longer.

To reduce regulatory lag and encourage infrastructure investment, the Public Utility Regulatory Act (PURA) should be amended to allow an affected utility to update the test year to reflect in-service investment up to seven months after the end of the test year, or 35 days after filing a rate case, whichever comes first. PURA should also be amended to preserve existing adjustments authorized by PUC rule and update the “known and measurable” standard.

Allow temporary rates
To reduce regulatory lag during the pendency of a rate case, PURA should also be amended to allow an affected utility to either: (1) declare the current rates to be “temporary rates” on the 35th day after filing, which are then trued up at the conclusion of the rate case; or (2) establish interim rates at 70 percent of the requested increase on the 35th day after the request is filed. In either case, the rate is “trued up” at the conclusion of the rate case through a refund or surcharge.

Allow transmission rider filings twice per year
The Legislature created the Transmission Cost Recover Factor (TCRF), which allows both ERCOT and non-ERCOT utilities to recover its transmission costs since the utility’s last base rate case through a “rider.” Under current rule, ERCOT utilities are allowed to file a transmission rider twice per year and implement the new rate 60 days after filing, while non-ERCOT utilities are only allowed to file a TCRF once per year and implement the new rates after 180 days.

PURA should therefore also be amended to allow the non-ERCOT utilities to file for a TCRF twice per year, rather than just once. This matches ERCOT utilities’ ability to file twice per year.

Provide a generation rider
To reduce regulatory lag for investments in generation, PURA should also be amended to allow an affected utility to file an application to recover certain generation investments, as approved by the PUC, through a generation rider. As noted above, transmission and distribution investments riders are already allowed.

Provide an expedited CCN process for generation
When a non-ERCOT utility plans to build a new plant or transmission line, the utility must first file a Certificate of Convenience and Necessity (CCN) with the PUC. Utilities also must file a CCN to buy a plant. Current law provides no required deadline for approval of the CCN. Long CCN timelines contribute to costly regulatory lag and can cause non-ERCOT utilities to miss advantageous capital market opportunities beneficial to customers.

To encourage utilities to invest in needed generation, PURA should also be amended to require a CCN for a purchased asset to be administratively approved within six months and to require a CCN for a newly constructed generation unit to be granted in one year.

Click here to download a PDF of this issue paper.

SB 841 by Creighton/HB 1535 by Frullo: Modernized Ratemaking for Non-ERCOT Utilities Will Improve Efficiency and Support Investment in Non-ERCOT Areas

 

Investor-owned electric utilities located outside the ERCOT grid serve over 1 million customers in Texas, including several key national industries. Known as the “Non-ERCOTs,” these companies offer a vital service as basic as roads and water, but rely exclusively on private investment dollars. These traditionally regulated utilities still have the responsibility to ensure the lights come on when customers flip the switch.

Non-ERCOT map

The Problem: The Current Ratemaking Process Stifles Investment in Critical Infrastructure

Despite Texas’ business-friendly environment, non-ERCOT utilities operate under an outdated regulatory model that produces “regulatory lag,” an extended time period between the date that infrastructure is placed in service and the date investors may start recovering their investment.

Regulatory lag hinders the flow of capital into these key strategic areas and undermines the non-ERCOT utilities’ ability to build needed infrastructure. Debt rating agencies have cited regulatory lag when assigning lower debt ratings to the four non-ERCOT utilities. Lower debt ratings threaten the utilities’ financial integrity and increase the cost of capital, which ultimately makes power more expensive for customers.

The Solution: Modernized Ratemaking Will Benefit Customers While Supporting Critical Infrastructure Investment

SB 841/HB 1535 will better synchronize the timing of investment and cost recovery. The bill will not reduce PUC oversight or result in greater cost recovery, nor will it increase the long-term rates customers pay. Instead, SB 841/HB 1535 will allow non-ERCOT utilities to make timely investments to meet demand, which supports economic development in non-ERCOT regions by providing the transmission, distribution and generation needed for growth.

SB 841/HB 1535 will benefit customers in non-ERCOT regions of Texas in several ways. The bill:

  • Ensures a safe, reliable electric grid, which is the backbone of economic development
  • Allows utilities to build infrastructure at the lowest possible capital cost, with better financing terms and fewer expensive rate cases — which means customers will save in the long run compared to the inefficient ratemaking system of today
  • Helps utilities compete for capital with utilities in neighboring states, which have more efficient ratemaking processes
  • Allows for faster development of needed electric infrastructure to help cities in non-ERCOT regions meet growing demand

Click here to download a PDF of this issue paper.

 

PUC Rules Protect Customers and Facilitate Choice

 

Recent calls for increased regulation of the competitive retail electric market allege that choosing an electric product is confusing, and therefore REPs should be limited by rule in the product structures offered. However, existing laws and regulations already address many of those concerns.

The competitive market continues to bring innovative electric products with the prices and services customers want. Additional regulations are simply not necessary and may result in increased prices for all customers.

Customers Have Significant Protections in the Competitive Market

  • By law, REPs are required to provide clear written disclosure of price and fee information so customers can make an informed choice when choosing an electric product.
  • All retail electric products must include a standardized Electricity Facts Label (EFL) that describes the product, rate structure and full price for service, including utility delivery charges at different usage amounts. Customers may request an EFL for a product that is in the market at any time.
  • The Public Utility Commission of Texas (PUC) enforces strict customer protection standards. These standards apply to all sales channels including door-to-door enrollments.
  • Failure to meet the standards established by the PUC result in significant consequences ranging from financial penalties to revocation of a REP’s Certificate.

Consumers Can Choose a Product to Best Suit Their Needs

  • There are dozens of REPs and hundreds of offers available to customers in the competitive market. As of January 2015, customers in competitive areas typically had at least 250 plans available, many without minimum usage fees.
  • Prices remain low; customers can find offers well below the regulated electric rates in 2001, just before the competitive market opened.
  • REPs need the flexibility to create products that meet different customer needs while determining the best business practices to keep prices low for all customers.
  • Structuring fees for certain customer actions like calling a call center, minimum usage and early contract termination allow REPs to assign expenses to customers that are the basis for those costs. This results in lower prices because REPs don’t have to socialize those costs to all customers.

Download a PDF of this issue paper.