Law:Title 2. Public Utility Regulatory Act. Subtitle B. Electric Utilities from Chapter 37. Certificates Of Convenience And Necessity (Texas)

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Subtitle B. Electric Utilities

Contents

Chapter 37. Certificates Of Convenience And Necessity

Subchapter A. Definitions

Section  37.001.  Definitions.

In this chapter:

(1)  "Certificate" means a certificate of convenience and necessity.

(2)  "Electric utility" includes an electric cooperative.

(3)  "Retail electric utility" means a person, political subdivision, electric cooperative, or agency that operates, maintains, or controls in this state a facility to provide retail electric utility service. The term does not include a corporation described by Section 32.053 to the extent that the corporation sells electricity exclusively at wholesale and not to the ultimate consumer. A qualifying cogenerator that sells electric energy at retail to the sole purchaser of the cogenerator's thermal output under Sections 35.061 and 36.007 is not for that reason considered to be a retail electric utility. The owner or operator of a qualifying cogeneration facility who was issued the necessary environmental permits from the Texas Natural Resource Conservation Commission after January 1, 1998, and who commenced construction of such qualifying facility before July 1, 1998, may provide electricity to the purchasers of the thermal output of that qualifying facility and shall not for that reason be considered an electric utility or a retail electric utility, provided that the purchasers of the thermal output are owners of manufacturing or process operation facilities that are located on a site entirely owned before September, 1987, by one owner who retained ownership after September, 1987, of some portion of the facilities and that those facilities now share some integrated operations, such as the provision of services and raw materials.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997. Amended by Acts 1999, 76th Leg., ch. 405, Sec. 29, eff. Sept. 1, 1999.



Subchapter B. Certificate Of Convenience And Necessity

Section  37.051.  Certificate Required.

(a) An electric utility or other person may not directly or indirectly provide service to the public under a franchise or permit unless the utility or other person first obtains from the commission a certificate that states that the public convenience and necessity requires or will require the installation, operation, or extension of the service.

(b)  Except as otherwise provided by this chapter, a retail electric utility may not furnish or make available retail electric utility service to an area in which retail electric utility service is being lawfully furnished by another retail electric utility unless the utility first obtains a certificate that includes the area in which the consuming facility is located.

(c)  Notwithstanding any other provision of this chapter, including Subsection (a), an electric cooperative is not required to obtain a certificate of public convenience and necessity for the construction, installation, operation, or extension of any generating facilities or necessary interconnection facilities.

(d)  A certificate may be granted to an electric utility or other person under this section for a facility used as part of the transmission system serving the ERCOT power region solely for the transmission of electricity.

(e)  The commission may consider an application filed by a person not currently certificated as an electric utility for a certificate of convenience and necessity to construct transmission capacity that serves the ERCOT power region.  Before granting a certificate under this section, the commission must find, after notice and hearing, that:

(1)  the applicant has the technical ability, financial ability, and sufficient resources in this state to own, operate, and maintain reliable transmission facilities;

(2)  the applicant has the resources and ability to comply with commission rules, requirements of the independent organization certified under Section 39.151 for the ERCOT power region, and requirements of the National Electric Reliability Council applicable to the provisions of transmission service; and

(3)  for an application filed by a person that is not an electric utility, granting the application will not adversely affect wholesale transmission rates, as compared to the rates projected to be charged if an existing electric utility were to build the transmission facility.

(f)  The commission shall consider the requirements of Subsection (e) to have been met by an electric utility or other person that:

(1)  is selected by the commission as a transmission provider under a plan adopted by the commission under Section 39.904 not later than September 1, 2009; and

(2)  before the certificate is issued, provides to the commission a detailed plan regarding the offices, personnel, and other resources the electric utility or other person will have in this state to ensure provision of continuous and adequate transmission service.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997. Amended by Acts 1999, 76th Leg., ch. 405, Sec. 30, eff. Sept. 1, 1999.

Amended by:

Acts 2009, 81st Leg., R.S., Ch. 1170, Sec. 2, eff. June 19, 2009.



Section  37.052.  Exceptions To Certificate Requirement For Service Extension.

(a) An electric utility is not required to obtain a certificate for an:

(1)  extension into territory that is:

(A)  contiguous to the territory the electric utility serves;

(B)  not receiving similar service from another electric utility; and

(C)  not in another electric utility's certificated area;

(2)  extension in or to territory the utility serves or is authorized to serve under a certificate; or

(3)  operation, extension, or service in progress on September 1, 1975.

(b)  An extension allowed under Subsection (a) is limited to a device used:

(1)  to interconnect existing facilities; or

(2)  solely to transmit electric utility services from an existing facility to a customer of retail electric utility service.

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



Section  37.053.  Application For Certificate.

(a) An electric utility or other person that wants to obtain or amend a certificate must submit an application to the commission.

(b)  The applicant shall file with the commission evidence the commission requires to show the applicant has received the consent, franchise, or permit required by the proper municipal or other public authority.

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

Amended by:

Acts 2009, 81st Leg., R.S., Ch. 1170, Sec. 3, eff. June 19, 2009.



Section  37.054.  Notice And Hearing On Application.

(a) When an application for a certificate is filed, the commission shall:

(1)  give notice of the application to interested parties; and

(2)  if requested:

(A)  set a time and place for a hearing; and

(B)  give notice of the hearing.

(b)  A person or electric cooperative interested in the application may intervene at the hearing.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997. Amended by Acts 1999, 76th Leg., ch. 405, Sec. 31, eff. Sept. 1, 1999.



Section 37.0541.  Consolidation Of Certain Proceedings.

The commission shall consolidate the proceeding on an application to obtain or amend a certificate of convenience and necessity for the construction of a transmission line with the proceeding on another application to obtain or amend a certificate of convenience and necessity for the construction of a transmission line if it is apparent from the applications or a motion to intervene in either proceeding that the transmission lines that are the subject of the separate proceedings share a common point of interconnection.  This section does not apply to a proceeding on an application for a certificate of convenience and necessity for a transmission line to serve a competitive renewable energy zone as part of a plan developed by the commission under Section 39.904(g)(2).

Added by Acts 2009, 81st Leg., R.S., Ch. 1170, Sec. 1, eff. June 19, 2009.



Section 37.055.  Request For Preliminary Order.

(a) An electric utility or other person that wants to exercise a right or privilege under a franchise or permit that the utility or other person anticipates obtaining but has not been granted may apply to the commission for a preliminary order under this section.

(b)  The commission may issue a preliminary order declaring that the commission, on application and under commission rules, will grant the requested certificate on terms the commission designates, after the electric utility or other person obtains the franchise or permit.

(c)  The commission shall grant the certificate on presentation of evidence satisfactory to the commission that the electric utility or other person has obtained the franchise or permit.

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

Amended by:

Acts 2009, 81st Leg., R.S., Ch. 1170, Sec. 4, eff. June 19, 2009.



Section  37.056.  Grant Or Denial Of Certificate.

(a) The commission may approve an application and grant a certificate only if the commission finds that the certificate is necessary for the service, accommodation, convenience, or safety of the public.

(b)  The commission may:

(1)  grant the certificate as requested;

(2)  grant the certificate for the construction of a portion of the requested system, facility, or extension or the partial exercise of the requested right or privilege; or

(3)  refuse to grant the certificate.

(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; 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.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997. Amended by Acts 2003, 78th Leg., ch. 295, Sec. 2, eff. June 18, 2003.



Section 37.057.  Deadline For Application For New Transmission Facility.

The commission may grant a certificate for a new transmission facility to a qualified applicant that meets the requirements of this subchapter. The commission must approve or deny an application for a certificate for a new transmission facility not later than the first anniversary of the date the application is filed.  If the commission does not approve or deny the application on or before that date, a party may seek a writ of mandamus in a district court of Travis County to compel the commission to decide on the application.

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

Amended by:

Acts 2009, 81st Leg., R.S., Ch. 1170, Sec. 4, eff. June 19, 2009.



Section  37.059.  Revocation Or Amendment Of Certificate.

(a) The commission may revoke or amend a certificate after notice and hearing if the commission finds that the certificate holder has never provided or is no longer providing service in all or any part of the certificated area.

(b)  The commission may require one or more electric utilities to provide service in an area affected by the revocation or amendment of a certificate.

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



Section  37.060.  Division Of Multiply Certificated Service Areas.

(a) This subsection and Subsections (b)-(g) apply only to areas in which each retail electric utility that is authorized to provide retail electric utility service to the area is providing customer choice. For purposes of this subsection, an electric cooperative or a municipally owned electric utility shall be deemed to be providing customer choice if it has approved a resolution adopting customer choice that is effective on January 1, 2002, or effective within 24 months after the date of the resolution adopting customer choice. All other retail electric utilities shall be deemed to be providing customer choice if customer choice will be allowed for customers of the retail electric utility on January 1, 2002. In areas in which each certificated retail electric utility is providing customer choice, the commission, if requested by a retail electric utility, shall examine all areas within the service area of the retail electric utility making the request that are also certificated to one or more other retail electric utilities and, after notice and hearing, shall amend the retail electric utilities' certificates so that only one retail electric utility is certificated to provide distribution services in any such area. Only retail electric utilities certificated to serve an area on June 1, 1999, may continue to serve the area or portion of the area under an amended certificate issued under this subsection.

(b)  This section does not apply in any area in which a municipally owned utility is certificated to provide retail electric utility service if the municipally owned utility serving the area files with the commission by October 1, 2001, a request that areas within the certificated service area of the municipally owned utility remain as presently certificated.

(c)  The commission shall enter its order dividing multiply certificated areas within one year of the date a request is received.

(d)  In amending certificates under this section, the commission shall take into consideration the factors prescribed by Section 37.056.

(e)  Notwithstanding Section 37.059, the commission shall revoke certificates to the extent necessary to achieve the division of retail electric service areas as provided by this section.

(f)  Unless otherwise agreed by the affected retail electric utilities, each retail electric utility shall be allowed to continue to provide service to the location of electricity-consuming facilities it is serving on the date an application for division of the affected multiply certificated service areas is filed. No customer located within the affected multiply certificated service areas shall be permitted to switch from one retail electric utility to another while an application for division of the affected multiply certificated service areas is pending.

(g)  If on June 1, 1999, retail service is being provided in an area by another retail electric utility with the written consent of the retail electric utility certificated to serve the area, that consent shall be filed with the commission. On notification of that consent and a request by an affected retail electric utility to amend the relevant certificates, the commission may grant an exception or amend a retail electric utility's certificate. This provision shall not be construed to limit the commission's authority to grant exceptions or to amend a retail electric utility's certificate, upon request and notification, for areas to which retail service is being provided pursuant to written consent granted after June 1, 1999.

(h)  The commission may not grant an additional retail electric utility certificate to serve an area if the effect of the grant would cause the area to be multiply certificated unless the commission finds that the certificate holders are not providing service to any part of the area for which a certificate is sought and are not capable of providing adequate service to the area in accordance with applicable standards. However, neither this subsection nor the deadline of June 1, 1999, provided by Subsection (a) shall apply to any application for multiple certification filed with the commission on or before February 1, 1999, and those applications may be processed in accordance with applicable law in effect on the date the application was filed. Applications for multiple certification filed with the commission on or before February 1, 1999, may not be amended to expand the area for which a certificate is sought except for contiguous areas within municipalities that provide consent, as required by Section 37.053(b), not later than June 1, 1999.

(i)  Notwithstanding any other provision of this section, if requested by a municipally owned utility, the commission shall examine all areas within the municipally owned utility's service area that are also certificated to one or more other retail electric utilities and, after notice and hearing, may amend the retail electric utilities' certificates so that only one retail electric utility is certificated to provide distribution services in the area, provided that:

(1)  the application is filed with the commission within 12 months of the effective date of this provision and is limited to single certification of the area within the municipality's boundaries as of February 1, 1999;

(2)  the commission preserves the right of an electric utility or an electric cooperative to serve its existing customers, including any property owned or leased by any customer; and

(3)  the municipality is a member city of a municipal power agency, as that term is used in Section 40.059.

Added by Acts 1999, 76th Leg., ch. 405, Sec. 32, eff. Sept. 1, 1999. Amended by Acts 2001, 77th Leg., ch. 796, Sec. 1, eff. June 14, 2001.



Section  37.061.  Existing Service Area Agreements.

(a) Notwithstanding any other provision of this title, the commission shall allow a municipally owned utility to amend the service area boundaries of its certificate if:

(1)  the municipally owned utility was the holder of a certificate as of January 1, 1999;

(2)  the municipally owned utility has an agreement existing before January 1, 1999, with a public utility serving the area that the public utility will not contest an application to amend the certificate to add municipal territory; and

(3)  the area for which a certificate is requested is not certificated to a retail electric utility that is not a party to the agreement and that has not consented in writing to certification of the area to the municipality.

(b)  The commission may not amend the certificate of the public utility serving the affected area based on the granting of a certificate to the municipally owned utility.

Added by Acts 1999, 76th Leg., ch. 405, Sec. 32, eff. Sept. 1, 1999.



Subchapter C. Municipalities

Section  37.101.  Service In Annexed Or Incorporated Area.

(a) If an area is or will be included within a municipality as the result of annexation, incorporation, or another reason, each electric utility and each electric cooperative that holds or is entitled to hold a certificate under this title to provide service or operate a facility in the area before the inclusion has the right to continue to provide the service or operate the facility and extend service within the utility's or cooperative's certificated area in the annexed or incorporated area under the rights granted by the certificate and this title.

(b)  Notwithstanding any other law, an electric utility has the right to:

(1)  continue and extend service within the utility's certificated area; and

(2)  use roads, streets, highways, alleys, and public property to furnish retail electric utility service.

(c)  The governing body of a municipality may require an electric utility to relocate the utility's facility at the utility's expense to permit the widening or straightening of a street by:

(1)  giving the electric utility 30 days' notice; and

(2)  specifying the new location for the facility along the right-of-way of the street.

(d)  This section does not:

(1)  limit the power of a city, town, or village to incorporate or of a municipality to extend its boundaries by annexation; or

(2)  prohibit a municipality from levying a tax or other special charge for the use of the streets as authorized by Section 182.025, Tax Code.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997. Amended by Acts 1999, 76th Leg., ch. 405, Sec. 33, eff. Sept. 1, 1999.



Section  37.102.  Grant Of Certificate For Certain Municipalities.

(a) If a municipal corporation offers retail electric utility service in a municipality having a population of more than 135,000 that is located in a county having a population of more than 1,500,000, the commission shall singly certificate areas in the municipality's boundaries in which more than one electric utility provides electric utility service.

(b)  In singly certificating an area under Subsection (a), the commission shall preserve the right of an electric utility to serve the customers the electric utility was serving on June 17, 1983. This subsection does not apply to a customer at least partially served by a nominal 69,000 volts system who gave notice of termination to the utility servicing that customer before June 17, 1983.

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



Subchapter D. Regulation Of Services, Areas, And Facilities

Section 37.151.  Provision Of Service.

Except as provided by this section, Section 37.152, and Section 37.153, a certificate holder, other than one granted a certificate under Section 37.051(d), shall:

(1)  serve every consumer in the utility's certificated area; and

(2)  provide continuous and adequate service in that area.

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

Amended by:

Acts 2009, 81st Leg., R.S., Ch. 1170, Sec. 4, eff. June 19, 2009.



Section  37.152.  Grounds For Reduction Of Service.

(a) Unless the commission issues a certificate that the present and future convenience and necessity will not be adversely affected, a certificate holder may not discontinue, reduce, or impair service to any part of the holder's certificated service area except for:

(1)  nonpayment of charges;

(2)  nonuse; or

(3)  another similar reason that occurs in the usual course of business.

(b)  A discontinuance, reduction, or impairment of service must be in compliance with and subject to any condition or restriction the commission prescribes.

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



Section 37.153.  Required Refusal Of Service. A Certif

icate holder shall refuse to serve a customer in the holder's certificated area if the holder is prohibited from providing the service under Section 212.012, 232.029, or 232.0291, Local Government Code.

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

Amended by:

Acts 2005, 79th Leg., Ch. 708, Sec. 13, eff. September 1, 2005.



Section  37.154.  Transfer Of Certificate.

(a) An electric utility may sell, assign, or lease a certificate or a right obtained under a certificate if the commission determines that the purchaser, assignee, or lessee can provide adequate service.

(b)  A sale, assignment, or lease of a certificate or a right is subject to conditions the commission prescribes.

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



Section  37.155.  Application Of Contracts.

A contract approved by the commission between retail electric utilities that designates areas and customers to be served by the utilities:

(1)  is valid and enforceable; and

(2)  shall be incorporated into the appropriate areas of certification.

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



Section  37.156.  Interference With Another Utility.

If an electric utility constructing or extending the utility's lines, plant, or system interferes or attempts to interfere with the operation of a line, plant, or system of another utility, the commission by order may:

(1)  prohibit the construction or extension; or

(2)  prescribe terms for locating the affected lines, plants, or systems.

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



Section  37.157.  Maps.

An electric utility shall file with the commission one or more maps that show each utility facility and that separately illustrate each utility facility for the generation, transmission, or distribution of the utility's services on a date the commission orders.

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


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