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89(R) SB 1856 - Enrolled version - Bill Text
S.B. No. 1856
AN ACT
relating to a capacity cost recovery rider for certain electric
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.
RECOVERY OF ANNUAL CAPACITY-RELATED COSTS.
(a) This section applies only to an electric utility that operates
solely outside of ERCOT in areas of this state included in the
Southeastern Electric Reliability Council.
(b)
It is the intent of the legislature that certain changes
to the level of an electric utility's capacity-related costs and
capacity-related revenues due to wholesale rate decisions and
determinations by a federal agency or a regional transmission
organization subject to federal jurisdiction should be timely
reflected in the utility's rates.
(c)
On application by an electric utility that has not
exceeded the utility's authorized return on equity as shown in the
utility's most recent earnings monitoring report at the time of the
application, the commission shall establish a capacity cost
recovery rider that must be annually updated and that allows:
(1)
recovery of the utility's costs that are eligible
as provided by Subsection (d); and
(2)
return to ratepayers of the utility's revenues
that are eligible as provided by Subsection (d).
(d)
In this section, eligible costs and revenues are
capacity-related costs and revenues associated with the electric
utility's participation in a multi-state capacity auction operated
by a regional transmission organization or independent system
organization authorized by the Federal Energy Regulatory
Commission, to the extent the costs and revenues are not already
being recovered through the utility's base rates.
(e)
Amounts recovered through a capacity cost recovery
rider are subject to reconciliation in the next base rate
proceeding for the electric utility. As part of the
reconciliation, the commission shall review the costs and revenues
to determine if they were reasonable and prudently incurred and to
ensure the electric utility is only recovering costs allocable to
retail customers in this state and is not over-recovering costs.
In
each base rate proceeding following the establishment of a capacity
cost recovery rider, the commission shall remove from the electric
utility's base rates all cost and revenue items eligible for
recovery through the electric utility's capacity cost recovery
rider.
(f)
The annual revenue requirement and rates for a proposed
capacity cost recovery rider must include:
(1)
the electric utility's calculated costs and
revenues for the upcoming year beginning on the June 1 associated
with the utility's participation in a multi-state capacity auction;
and
(2)
a true-up amount that accounts for any difference
between the utility's actual eligible costs and revenues and the
utility's actual collections under any capacity cost recovery rider
put into effect two years before the proposed effective date of the
proposed rider, plus:
(A)
an amount to account for any mathematical
error identified in the utility's most recent capacity cost
recovery rider application proceeding; and
(B)
an amount to account for any refunds or
surcharges ordered by the Federal Energy Regulatory Commission or
by a regional transmission organization or independent system
organization related to a previous year's capacity auction that:
(i)
are identified on a regional
transmission organization or independent system operator
settlement statement; or
(ii)
were directed by a Federal Energy
Regulatory Commission order issued in the preceding 12-month
period.
(g)
The capacity cost recovery rider charges must be derived
using:
(1)
the same production demand allocation factors
approved in the electric utility's most recent base rate case; and
(2)
the projected billing determinants for the rate
effective period.
(h)
The billing determinants must be derived using each
customer class's projected kilowatt-hour usage, except for
customer classes with demand meters for which the billing
determinants must be derived using each customer class's projected
kilowatt billing demand.
(i)
Until the time the electric utility removes from base
rates the costs eligible for rider recovery under Subsection (d),
and the costs eligible for rider recovery described in Subsection
(g)(2), and these costs are recovered solely through the capacity
cost recovery rider, the calculation of the capacity cost recovery
rider must include a load growth adjustment to 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.
(j)
The commission shall process an application to
establish or update a capacity cost recovery rider in accordance
with Subsections (k)-(o).
(k)
For a capacity cost recovery rider that will include an
electric utility's costs to be incurred beginning on June 1 of a
given year, the utility must submit the rider application not later
than:
(1) May 15 of that year; or
(2)
if the regional transmission organization or
independent system operator publishes its capacity auction cost
results after the 20th business day of April of that year, a date
that is the same number of days after May 15 of that year as the
number of days after the 20th business day of April the results were
published.
(l)
The application must be fully documented, including
testimony and all supporting work papers in native format.
(m)
A response to the electric utility's filing that is made
by commission staff or an intervenor:
(1)
must be filed not later than the 15th day after the
date of the utility's filing; and
(2)
may address only whether the application conforms
with any rule the commission adopts to implement this section and
the mathematical accuracy of the utility's proposed capacity cost
recovery rider revenue requirement and rates.
(n)
Any other inaccuracy identified under Subsection (m)(2)
may be addressed only in the electric utility's next capacity cost
recovery rider application.
(o)
The commission may review costs and revenues and shall
issue an order approving, modifying, or denying an electric
utility's proposed or updated capacity cost recovery rider not
later than the 60th day after the date the application is filed.
(p) This section expires September 1, 2035.
SECTION 2. An electric utility to which Section 36.216,
Utilities Code, as added by this Act, applies may file an
application with the Public Utility Commission of Texas to recover
eligible costs described by Section 36.216(d), Utilities Code, as
added by this Act, to be incurred before September 1, 2026,
regardless of whether the commission has adopted any rules
regarding capacity cost recovery riders. Not later than the 60th
day after the date the application is filed, the commission shall
issue an order approving, modifying, or denying the proposed or
updated capacity cost recovery rider. The electric utility shall
begin imposing the rates approved by the commission for service
rendered during or after the first billing cycle of the month
following the issuance of the order.
SECTION 3. 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 hereby certify that S.B. No. 1856 passed the Senate on
May 9, 2025, by the following vote: Yeas 31, Nays 0.
______________________________
Secretary of the Senate
I hereby certify that S.B. No. 1856 passed the House on
May 24, 2025, by the following vote: Yeas 129, Nays 4, two
present not voting.
______________________________
Chief Clerk of the House
Approved:
______________________________
Date
______________________________
Governor