Relating to an alternative capital recovery process for certain utilities.

89(R) HB 5247 - Enrolled version - Bill Text

H.B. No. 5247

AN ACT

relating to an alternative capital recovery process for certain

utilities.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subchapter E, Chapter 36, Utilities Code, is

amended by adding Section 36.216 to read as follows:

Sec.

36.216.

SINGLE CAPITAL INVESTMENT PROCEDURE FOR

CERTAIN UTILITIES. (a) This section applies only to an electric

utility, other than a river authority, that:

(1) operates solely inside ERCOT; and

(2)

was identified by the commission as responsible

for constructing transmission as part of the reliability plan for

the Permian Basin approved by the commission under Section 39.167,

as added by Chapter 892 (H.B. 5066), Acts of the 88th Legislature,

Regular Session, 2023.

(b)

An electric utility that makes total capital

expenditures that exceed 300 percent of annual depreciation in a

calendar year may elect in the following calendar year to file a

single annual proceeding to adjust nonfuel rates on a system-wide

basis to reflect changes in transmission and distribution invested

capital in lieu of adjustments to retail and wholesale transmission

and distribution rates authorized under Section 36.210, Section

38.078, as added by Chapter 836 (H.B. 2555), Acts of the 88th

Legislature, Regular Session, 2023, and commission rules adopted

under Section 35.004.

(c)

An electric utility seeking to make an election under

this section shall:

(1)

except as provided by Subsection (d), use the

filing requirements adopted by the commission for the adjustment

proceedings described by Subsection (b);

(2)

file a notice with the commission of the utility's

intent to make the election and supporting documentation of the

capital expenditures described by Subsection (b) at least 60 days

before the date the utility makes a filing under Subsection (b);

(3)

provide evidence of the utility's ongoing

eligibility in the annual proceeding under Subsection (b); and

(4)

notify the commission if the utility determines

that the utility no longer qualifies for continued use of the

adjustment under this section.

(d)

An electric utility that makes an election under this

section:

(1)

may defer all or a portion of the costs, including

depreciation expense and carrying costs, associated with the

transmission and distribution invested capital at the utility's

weighted average cost of capital established in the commission's

final order in the utility's most recent base rate proceeding for

invested capital, as described by Section 36.053, not currently

reflected in the utility's rates for recovery as a regulatory

asset; and

(2) shall:

(A)

update the allocation of costs among customer

classes to reflect customer growth; and

(B)

take into account changes in the number of

the utility's customers and the effects, on a weather-normalized

basis, that energy consumption and energy demand have on the amount

of revenue recovered through the utility's base rates.

(e)

Unless otherwise agreed to by an electric utility that

makes an election under this section, the commission shall:

(1)

include the regulatory asset in rates set under

this section; and

(2)

authorize amortization of the regulatory asset

over:

(A) a period not to exceed 18 months; or

(B)

if a recovery period described by Paragraph

(A) would cause the utility to earn more than the utility's allowed

return on investment as normalized for weather, a longer recovery

period.

(f)

During a period when an electric utility that makes an

election under this section earns more than the utility's allowed

return on investment, on a weather-adjusted basis, the utility

shall apply the over-earnings to the balance of the regulatory

asset under Subsections (d) and (e).

(g)

The commission shall approve an adjustment under this

section not later than the 120th day after the date an electric

utility files a request for the adjustment.

(h)

The electric utility shall provide notice to retail

electric providers of rates approved under this section not later

than the 45th day before the date the rates take effect.

(i)

If the commission does not issue a final order in the

period described by Subsection (g) and the electric utility

complies with Subsection (h), the utility may place the requested

rates into effect on a temporary basis not earlier than the 165th

day after filing the request. The utility shall refund or credit

against future bills any difference between the temporary rate and

the final rate along with interest at the current interest rate as

determined by the commission.

(j)

An electric utility that makes an election under this

section may not petition for another adjustment under this section,

Section 36.210, Section 38.078, as added by Chapter 836 (H.B.

2555), Acts of the 88th Legislature, Regular Session, 2023, or

commission rules adopted under Section 35.004 before the first

anniversary of the date the utility files a request under

Subsection (b).

(k)

Notwithstanding any other law, in setting the rate of

return in a comprehensive base rate proceeding for an electric

utility receiving a rate adjustment under this section, the

commission may expressly consider the effect of the adjustment on

the utility's financial risk and rate of return.

(l)

An electric utility's use of this section terminates

when the utility no longer qualifies for an adjustment under this

section, except that the utility's rates in effect on the date the

utility no longer qualifies remain in effect until modified in a

future proceeding.

(m) Nothing in this section is intended to:

(1)

conflict with a provision of a financing order

issued under Subchapter I;

(2)

affect the limitation on the commission's

jurisdiction under Section 32.002;

(3)

limit the jurisdiction of a municipality over the

rates, operations, and services of an electric utility under

Section 33.001 or limit the ability of a municipality to obtain a

reimbursement under Section 33.023;

(4)

prevent an electric utility, including a river

authority, from requesting cost recovery or rate relief under a

mechanism authorized under Chapter 36 or other provisions of this

title if the utility or authority is ineligible or becomes

ineligible to make an election under this section; or

(5) prevent the commission from:

(A)

reviewing the investment costs included in an

adjustment under this section in the electric utility's next

comprehensive base rate proceeding to determine whether the costs

were prudent, reasonable, and necessary;

(B)

refunding to customers any amount improperly

recovered through an adjustment under this section, with

appropriate carrying costs; or

(C)

if applicable, refunding to customers the

realized equity portion of carrying costs deferred under Subsection

(d)(1) on a transmission project associated with the reliability

plan described by Subsection (a) if the in-service date is

unreasonably delayed beyond December 31, 2030, due to the utility's

actions, unless the utility demonstrates through contemporaneous

documentation of the utility's analysis and decision-making that

the delay is necessary to maximize the load serving capability of

other transmission projects.

(n) This section expires December 31, 2035.

SECTION 2. As soon as practicable after the effective date

of this Act, the Public Utility Commission of Texas shall adopt

rules necessary to implement Section 36.216, Utilities Code, as

added by this Act.

SECTION 3. It is the intent of the 89th Legislature, Regular

Session, 2025, that the amendments made by this Act be harmonized

with another Act of the 89th Legislature, Regular Session, 2025,

relating to nonsubstantive additions to and corrections in enacted

codes.

SECTION 4. 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, 2025.

______________________________

______________________________

President of the Senate

Speaker of the House

I certify that H.B. No. 5247 was passed by the House on May 8,

2025, by the following vote: Yeas 137, Nays 8, 2 present, not

voting; and that the House concurred in Senate amendments to H.B.

No. 5247 on May 28, 2025, by the following vote: Yeas 110, Nays 28,

1 present, not voting.

______________________________

Chief Clerk of the House

I certify that H.B. No. 5247 was passed by the Senate, with

amendments, on May 25, 2025, by the following vote: Yeas 31, Nays

0.

______________________________

Secretary of the Senate

APPROVED: __________________

Date

__________________

Governor