Law:Title 2. Public Utility Regulatory Act. Subtitle B. Electric Utilities from Chapter 35. Alternative Energy Providers (Texas)

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Subtitle B. Electric Utilities

Contents

Chapter 35. Alternative Energy Providers

Subchapter A. Competition And Transmission Access In The Wholesale Market

Section  35.001.  Definition.

In this subchapter, "electric utility" includes a municipally owned utility and an electric cooperative.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997. Amended by Acts 1999, 76th Leg., ch. 405, Sec. 16, eff. Sept. 1, 1999.



Section  35.002.  Right To Compete At Wholesale.

A provider of generation, including an electric utility affiliate, exempt wholesale generator, and qualifying facility, may compete for the business of selling power.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.



Section  35.003.  Purchase From Affiliate; Undue Preference Prohibited.

(a) An electric utility may purchase power from an affiliate in accordance with this title.

(b)  An electric utility may not grant an undue preference to a person in connection with the utility's purchase or sale of electric energy at wholesale or other utility service.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.



Section  35.004.  Provision Of Transmission Service.

(a) An electric utility or transmission and distribution utility that owns or operates transmission facilities shall provide wholesale transmission service at rates and terms, including terms of access, that are comparable to the rates and terms of the utility's own use of its system.

(b)  The commission shall ensure that an electric utility or transmission and distribution utility provides nondiscriminatory access to wholesale transmission service for qualifying facilities, exempt wholesale generators, power marketers, power generation companies, retail electric providers, and other electric utilities or transmission and distribution utilities.

(c)  When an electric utility, electric cooperative, or transmission and distribution utility provides wholesale transmission service within ERCOT at the request of a third party, the commission shall ensure that the utility recovers the utility's reasonable costs in providing wholesale transmission services necessary for the transaction from the entity for which the transmission is provided so that the utility's other customers do not bear the costs of the service.

(d)  The commission shall price wholesale transmission services within ERCOT based on the postage stamp method of pricing under which a transmission-owning utility's rate is based on the ERCOT utilities' combined annual costs of transmission divided by the total demand placed on the combined transmission systems of all such transmission-owning utilities within a power region. An electric utility subject to the freeze period imposed by Section 39.052 may treat transmission costs in excess of transmission revenues during the freeze period as an expense for purposes of determining annual costs in the annual report filed under Section 39.257. Notwithstanding Section 36.201, the commission may approve wholesale rates that may be periodically adjusted to ensure timely recovery of transmission investment. Notwithstanding Section 36.054(a), if the commission determines that conditions warrant the action, the commission may authorize the inclusion of construction work in progress in the rate base for transmission investment required by the commission under Section 39.203(e).

(e)  The commission shall ensure that ancillary services necessary to facilitate the transmission of electric energy are available at reasonable prices with terms and conditions that are not unreasonably preferential, prejudicial, discriminatory, predatory, or anticompetitive. In this subsection, "ancillary services" means services necessary to facilitate the transmission of electric energy including load following, standby power, backup power, reactive power, and any other services as the commission may determine by rule. On the introduction of customer choice in the ERCOT power region, acquisition of generation-related ancillary services on a nondiscriminatory basis by the independent organization in ERCOT on behalf of entities selling electricity at retail shall be deemed to meet the requirements of this subsection.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997. Amended by Acts 1999, 76th Leg., ch. 405, Sec. 17, eff. Sept. 1, 1999; Acts 2003, 78th Leg., ch. 295, Sec. 1, eff. June 18, 2003.



Section  35.005.  Authority To Order Transmission Service.

(a) The commission may require an electric utility to provide transmission service at wholesale to another electric utility, a qualifying facility, an exempt wholesale generator, or a power marketer and may determine whether terms for the transmission service are reasonable.

(b)  The commission may require transmission service at wholesale, including the construction or enlargement of a facility.

(c)  The commission may not issue a decision or rule relating to transmission service that is contrary to an applicable decision, rule, or policy statement of a federal regulatory agency having jurisdiction.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997. Amended by Acts 1999, 76th Leg., ch. 405, Sec. 18, eff. Sept. 1, 1999.



Section  35.006.  Rules Related To Wholesale Transmission Service, Rates, And Access.

(a) The commission shall adopt rules relating to wholesale transmission service, rates, and access. The rules:

(1)  must be consistent with the standards in this subchapter;

(2)  may not be contrary to federal law, including any applicable decision, rule, or policy statement of a federal regulatory agency having jurisdiction;

(3)  must require transmission services that are not less than the transmission services the Federal Energy Regulatory Commission may require in similar circumstances;

(4)  must require that an electric utility provide all ancillary services associated with the utility's discounted wholesale sales at the same prices and under the same terms as the services are provided to a third person; and

(5)  must require that an electric utility provide all ancillary services associated with the utility's discounted wholesale sales to a third person on request.

(b)  The commission shall adopt rules relating to the registration and reporting requirements of a qualifying facility, exempt wholesale generator, and power marketer.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.



Section  35.007.  Tariffs Required. (a)

Except as provided by Subsection (b), an electric utility that owns or operates a transmission facility shall file a tariff in compliance with commission rules adopted under Section 35.006.

(b)  An electric utility is not required to file a tariff under this section if the utility's terms for access and pricing for wholesale transmission service are included in another electric utility's tariff.

(c)  An electric utility shall file a tariff required by this section with the appropriate state or federal regulatory agency having jurisdiction over the utility's transmission service.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.



Section  35.008.  Alternative Dispute Resolution.

The commission may require that each party to a dispute concerning prices or terms of wholesale transmission service engage in a nonbinding alternative dispute resolution process before seeking resolution of the dispute by the commission.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.



Subchapter B. Exempt Wholesale Generators And Power Marketers

Section  35.031.  Authority To Operate.

An exempt wholesale generator or power marketer may sell electric energy only at wholesale.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.



Section  35.032.  Commission Registration And Required Reports.

(a) An exempt wholesale generator or power marketer that sells electric energy in this state shall, not later than the 30th day after the date it becomes subject to this section:

(1)  register with the commission; or

(2)  provide to the commission proof that it has registered with the Federal Energy Regulatory Commission or has been authorized by the Federal Energy Regulatory Commission to sell electric energy at market-based rates.

(b)  The exempt wholesale generator or power marketer may register by filing with the commission:

(1)  a description of the location of any facility used to provide service;

(2)  a description of the type of service provided;

(3)  a copy of any information filed with the Federal Energy Regulatory Commission in connection with registration with that commission; and

(4)  other information required by commission rule.

(c)  An exempt wholesale generator or power marketer required to register under Subsection (a) shall file any report required by commission rule.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.



Section  35.033.  Affiliate Wholesale Provider.

An affiliate of an electric utility may be an exempt wholesale generator or power marketer and may sell electric energy to its affiliated electric utility in accordance with laws governing wholesale sales of electric energy.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997. Amended by Acts 1999, 76th Leg., ch. 405, Sec. 19, eff. Sept. 1, 1999.



Section  35.034.  Transfer Of Assets.

(a) Unless an electric utility receives commission approval under Subsection (b), the utility may not sell or transfer a facility to an affiliate or otherwise consider the facility to be an eligible facility as defined by federal law if on May 27, 1995, the utility had a rate or charge in effect:

(1)  for or in connection with the construction of the facility;

(2)  for electric energy produced by the construction of the facility; or

(3)  for electric energy produced by the facility other than a portion of a rate or charge that represents recovery of the cost of a wholesale rate or charge.

(b)  The commission, after notice and hearing, may allow an electric utility to sell or transfer a facility governed by Subsection (a) to an affiliate or otherwise allow the facility to become an eligible facility only if the transaction:

(1)  will benefit ratepayers of the utility making the sale or transfer;

(2)  is in the public interest; and

(3)  otherwise complies with state law.

(c)  For purposes of this section, "electric utility" does not include a river authority.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997. Amended by Acts 1999, 76th Leg., ch. 405, Sec. 20, eff. Sept. 1, 1999.



Section  35.035.  Valuation And Accounting Of Transferred Assets.

(a) A transfer of assets from an electric utility to an affiliated exempt wholesale generator or power marketer shall be valued at the greater of net book cost or fair market value.

(b)  A transfer of assets from an exempt wholesale generator or power marketer to an affiliated electric utility shall be valued at the lesser of net book cost or fair market value.

(c)  At the time that a transfer of assets between an electric utility and an affiliated exempt wholesale generator or power marketer is approved, the commission shall order the utility to adjust its rates so that the utility's tariffs reflect benefits from the proceeds of the sale and exclude any costs associated with the transferred facility.

(d)  For purposes of this section, "electric utility" does not include a river authority.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997. Amended by Acts 1999, 76th Leg., ch. 405, Sec. 21, eff. Sept. 1, 1999.



Subchapter C. Qualifying Facilities

Section  35.061.  Encouragement Of Economical Production.

The commission shall adopt and enforce rules to encourage the economical production of electric energy by qualifying facilities.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.



Section  35.062.  Application For Certification.

(a) An electric utility or a qualifying facility may submit to the commission for certification a copy of an agreement between the utility and facility for the purchase of capacity.

(b)  An agreement submitted for certification under this section may provide that the agreement is contingent on certification by the commission.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.



Section  35.063.  Hearing. (a)

The commission, on its own motion or on the request of a party to the agreement or another affected person, may conduct a hearing on an agreement for which certification is sought under Section 35.062.

(b)  A request for a hearing or a commission decision to hold a hearing must be made not later than the 90th day after the date the agreement is submitted to the commission.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.



Section  35.064.  Certification Standards.

The commission shall certify an agreement submitted under Section 35.062 if the agreement:

(1)  provides for payments over the contract term that are equal to or less than the electric utility's avoided costs, as established by the commission and in effect at the time the agreement was signed; and

(2)  provides the electric utility the opportunity to acquire the cogeneration or small-power production installation before the installation is offered to another purchaser or provides other sufficient assurance that the electric utility will be provided with a comparable supply of electricity, if the qualifying facility ceases to operate the installation.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.



Section  35.065.  Deadlines For Commission Action.

(a) Except as provided by Subsection (b), the commission shall make its determination regarding whether a certification should be granted under Section 35.064 not later than the 90th day after the date the agreement is submitted.

(b)  If a hearing is held under Section 35.063, the commission shall make its determination regarding whether a certification should be granted not later than the 120th day after the date the agreement is submitted, except that this deadline is extended by two days for each day in excess of five days on which the commission conducts a hearing on the merits of the certification.

(c)  If the commission does not make a determination by the date provided by Subsection (a) or (b), as applicable, the agreement is considered to meet the requirements of Section 35.064 and the certification is considered granted.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.



Section  35.066.  Term Of Certification.

A certification of an agreement granted under this subchapter is effective until the earlier of:

(1)  the expiration date of the agreement; or

(2)  the 15th anniversary of the date of the certification.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.



Subchapter D. State Authority To Sell Or Convey Power

Section  35.101.  Definitions.

In this subchapter:

(1)  "Commissioner" means the Commissioner of the General Land Office.

(2)  "Public retail customer" means a retail customer that is an agency of this state, a state institution of higher education, a public school district, a political subdivision of this state, a military installation of the United States, or a United States Department of Veterans Affairs facility.

Added by Acts 1999, 76th Leg., ch. 405, Sec. 22, eff. Sept. 1, 1999. Amended by Acts 2003, 78th Leg., ch. 149, Sec. 19, eff. May 27, 2003.



Section  35.102.  State Authority To Sell Or Convey Power Or Natural Gas.

(a) The commissioner, acting on behalf of the state, may sell or otherwise convey power or natural gas generated from royalties taken in kind as provided by Sections 52.133(f), 53.026, and 53.077, Natural Resources Code, directly to a public retail customer regardless of whether the public retail customer is also classified as a wholesale customer under other provisions of this title.

(b)  To ensure that the state receives the maximum benefit from the sale of power or natural gas generated from royalties taken in kind, the commissioner shall use all feasible means to sell that power or natural gas first to public retail customers that are military installations of the United States, agencies of this state, institutions of higher education, or public school districts. The remainder of the power or natural gas, if any, may be sold to public retail customers that are political subdivisions of this state or to a United States Department of Veterans Affairs facility.

Added by Acts 1999, 76th Leg., ch. 405, Sec. 22, eff. Sept. 1, 1999. Amended by Acts 2003, 78th Leg., ch. 149, Sec. 20, eff. May 27, 2003.



Section  35.103.  Access To Transmission And Distribution Systems; Rates.

(a) Except as provided in Section 35.104, the state is entitled to have access to all transmission and distribution systems of all electric utilities, transmission and distribution utilities, municipally owned utilities, and electric cooperatives that serve public retail customers.

(b)  An entity described by Subsection (a) shall provide any utility service, including transmission, distribution, and other services, which must include any stranded costs associated with providing service, to the state at the lowest applicable rate charged for similar service to other customers.

Added by Acts 1999, 76th Leg., ch. 405, Sec. 22, eff. Sept. 1, 1999.



Section  35.104.  Limit In Certain Areas.

Sections 35.102 and 35.103 do not apply to the rates, retail service area, facilities, or public retail customers of a municipally owned electric utility that has not adopted customer choice or an electric cooperative that has not adopted customer choice. In a certificated service area of an electric utility in which customer choice has not been introduced, the state may not engage in retail transactions that exceed 2.5 percent of a retail electric utility's total retail load.

Added by Acts 1999, 76th Leg., ch. 405, Sec. 22, eff. Sept. 1, 1999.



Section  35.105.  Wholesale Customers.

This subchapter does not prevent the commissioner, acting on behalf of this state, from registering as a power marketer.

Added by Acts 1999, 76th Leg., ch. 405, Sec. 22, eff. Sept. 1, 1999.



Section  35.106.  Access To Power Generation.

If pipeline capacity is available on an existing facility of a gas utility or municipally owned utility, a gas utility or a municipally owned utility may not refuse to provide gas service to an electric utility generating facility, if the purpose of the service is to generate power for public retail customers by the state or an agency of this state.

Added by Acts 1999, 76th Leg., ch. 405, Sec. 22, eff. Sept. 1, 1999.


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