Texas Administrative Code
Title 16 - ECONOMIC REGULATION
Part 2 - PUBLIC UTILITY COMMISSION OF TEXAS
Chapter 25 - SUBSTANTIVE RULES APPLICABLE TO ELECTRIC SERVICE PROVIDERS
Subchapter I - TRANSMISSION AND DISTRIBUTION
Division 2 - TRANSMISSION AND DISTRIBUTION APPLICABLE TO ALL ELECTRIC UTILITIES
Section 25.216 - Selection of Transmission Service Providers
Universal Citation: 16 TX Admin Code § 25.216
Current through Reg. 50, No. 13; March 28, 2025
(a) Application. This section applies to any transmission service provider (TSP), or entity seeking to become a TSP, that submits an application to construct, operate, and maintain one or more competitive renewable energy zone (CREZ) Transmission Plan (CTP) Facilities.
(b) Purpose. The purpose of this section is to state the requirements that govern the selection and performance of one or more TSPs, or entities seeking to become TSPs, that will be responsible for the construction, operation, and maintenance of CTP Facilities.
(c) Definitions. The following words and terms when used in this section have the following meaning unless the context indicates otherwise:
(1)
CREZ Transmission Plan (CTP)--The transmission capacity plan required by §
25.174(c)(2) of
this title (relating to Competitive Renewable Energy Zones).
(2) CTP Facility--A transmission line with or
without a substation or any other transmission facility as identified in the
CTP and designated by the commission.
(3) CTP Proposal--An application to serve as
a Designated TSP for one or more CTP Facilities that is submitted by an
Interested TSP.
(4) Designated
TSP--An Interested TSP that the commission has designated to construct,
operate, and maintain one or more CTP Facilities.
(5) Interested TSP--An entity seeking status
as a Designated TSP that meets the definition of a TSP as defined by §
25.5(143) of
this title (relating to Definitions) or that commits to meeting such definition
as necessary to fulfill its obligations as a Designated TSP.
(6) Funds from operations--Net income from
continuing operations, depreciation and amortization, deferred income taxes,
and other non-cash items.
(7) Total
debt--Long-term debt, current maturities, commercial paper, and other
short-term borrowings.
(8)
Historically underutilized business--Defined by Texas Government Code §
481.191, as it may be
amended.
(9) Interest--Gross
interest without subtracting capitalized interest and interest
income.
(d) Selection process. The following steps outline the process the commission will employ to select Designated TSPs.
(1) The commission
will initiate a proceeding that will invite each Interested TSP to file a CTP
Proposal. The presiding officer shall set a procedural schedule that will
enable the commission to decide the issues in the proceeding within 180 days
after the deadline to file CTP Proposals unless good cause exists for setting a
different schedule. The presiding officer may sever issues or CTP Proposals
into separate proceedings.
(2) For
each existing CTP Facility requiring an upgrade or modification, the commission
will select the owner of the facility to be the Designated TSP for the CTP
Facility, unless the owner requests that a different Interested TSP be selected
or good cause exists to select another transmission service provider.
(3) For each new CTP Facility, the commission
will select a Designated TSP pursuant to subsection (e) of this
section.
(e) Selection of Designated TSP. The commission will evaluate each CTP Proposal received by considering, at a minimum, the current and expected capabilities of the Interested TSP to finance, license, construct, operate, and maintain the CTP Facility or Facilities in the most beneficial and cost-effective manner and the expertise of the Interested TSP's staff, the Interested TSP's projected capital costs and operating and maintenance costs for each CTP Facility, the Interested TSP's proposed schedule for development and completion of each CTP Facility, the Interested TSP's financial resources, the Interested TSP's expected use of historically underutilized businesses unless the Interested TSP is an electric cooperative or municipally owned utility, and the Interested TSP's understanding of the specific requirements to implement the CTP Facilities in its CTP Proposal and, if applicable, the Interested TSP's previous transmission experience and the Interested TSP's historical operating and maintenance costs for its existing transmission facilities.
(1)
Each Interested TSP shall submit with its CTP Proposal the following
information:
(A) A description of the process
that the Interested TSP will use for the preparation of any required
application for a certificate of convenience and necessity (CCN).
(B) For each CTP Facility transmission line,
a general description of the proposed structure types (lattice, monopole, etc.)
and composition (wood, steel, concrete, hybrid, etc.), conductor size and type,
and right-of-way (ROW) width.
(C)
The projected in-service date of each CTP Facility.
(D) A discussion of the type of resources,
including relevant capability and experience (in-house labor, contractors,
other TSPs, etc.) contemplated for use by the Interested TSP for the licensing,
design, engineering, material and equipment procurement, ROW and land
acquisition, construction, and project management related to the construction
of each CTP Facility.
(E) A
discussion of the type of resources contemplated by the Interested TSP for
operating and maintaining each CTP Facility after it is placed
in-service.
(F) A discussion of the
capability and experience of the Interested TSP that would enable it to comply
with all on-going scheduling, operating, and maintenance activities required
for each CTP Facility, including those required by policies, rules, guidelines,
and procedures established by the Electric Reliability Council of Texas
independent system operator or other independent organization, if
applicable.
(G) Resumes for key
management personnel that will be involved in obtaining a transmission CCN and
constructing, operating, and maintaining each CTP Facility.
(H) A discussion of the Interested TSP's
business practices that demonstrates that its business practices are consistent
with good utility practices for proper licensing, designing, ROW acquisition,
constructing, operating, and maintaining CTP Facilities. The Interested TSP
shall also provide the following information for the current calendar year and
the five calendar years immediately preceding its filing under subsection
(d)(1) of this section.
(i) A summary of law
violations by the Interested TSP found by federal regulatory agencies, state
public utility commissions, other regulatory agencies, or attorneys
general.
(ii) A summary of any
instances in which the Interested TSP is currently under investigation or is a
defendant in a proceeding involving an attorney general or any state or federal
regulatory agency, for violation of any laws, including regulatory
requirements.
(I) For
each CTP Facility transmission line, the estimated direct costs in current
dollars to construct (including design, engineering, materials, labor,
transportation and other necessary expenses but excluding ROW and land
acquisition) representative tangent, 30-degree, and 90-degree structures
suitable for the type of conductor that would be used. The estimated costs
shall be provided for each type of structure that might be used such as
lattice, monopole, etc.
(J) For
each CTP Facility transmission line, a detailed explanation and estimate of the
Interested TSP's anticipated average annual operating and maintenance
cost-per-mile in current dollars for the line for the first 10 years of
operation. Also, the Interested TSP shall provide the actual average direct
operating and maintenance cost-per-mile incurred by the Interested TSP for each
of the last five calendar years for all transmission lines owned and operated
by the Interested TSP that have the same voltage as the CTP Facility
transmission line.
(K) The
Interested TSP's overhead rate for managing third-parties, if the Interested
TSP contemplates the use of third-parties to perform any function related to
the licensing, construction, operation, or maintenance of the CTP Facility and
the willingness of the Interested TSP to maintain the overhead rate for the
managing of the third-party operation and maintenance for a fixed period of
time after the CTP Facility has been energized.
(L) The Interested TSP's preexisting
procedures and historical practices for acquiring ROW and land and managing ROW
and land acquisition for transmission facilities. If the Interested TSP does
not have such preexisting procedures, it shall provide a detailed description
of its plan for acquiring ROW and land and managing ROW and land
acquisition.
(M) The Interested
TSP's preexisting procedures and historical practices for mitigating the impact
of transmission facilities on affected landowners and for addressing public
concerns regarding transmission facilities. If the Interested TSP does not have
such preexisting procedures, it shall provide a detailed description of its
plan for mitigating the impacts on affected landowners and addressing public
concerns regarding CTP Facilities.
(N) A proposed financial plan that confirms
that:
(i) adequate capital resources are
available to the Interested TSP to allow the Interested TSP to finance the CTP
Facilities, and
(ii) no significant
negative impact on the creditworthiness or financial condition of the
Interested TSP, as demonstrated in paragraph (2)(A) - (D) of this subsection,
will occur as a result of the Interested TSP's construction, operation, and
maintenance of the CTP Facilities. In evaluating an Interested TSP's financial
plan the commission will consider the terms of the proposed financing available
to the Interested TSP including variable and fixed cost financing, short-term
and long-term maturities and an Interested TSP's willingness and ability to fix
the cost of financing for a fixed period of time.
(O) An affidavit by an officer of the
Interested TSP stating that the information in the application is true and that
the Interested TSP will comply with the applicable rules in this title and with
the Public Utility Regulatory Act (PURA).
(P) Other evidence, at the discretion of the
Interested TSP, which supports its selection as a Designated TSP.
(Q) Unless the Interested TSP is an electric
cooperative or municipally owned utility, a description of the Interested TSP's
use of historically underutilized businesses for the last five calendar years
and expected use of historically underutilized businesses.
(R) Subparagraphs (A) - (N) of this paragraph
do not apply to a CTP Proposal that is supported or unopposed by all parties in
the proceeding by the deadline to file the CTP Proposal.
(2) The Interested TSP must establish that it
has adequate financial resources as described in subparagraphs (A) - (G) of
this paragraph.
(A) The Interested TSP holds
a CCN issued by the commission for electric transmission facilities, or the
Interested TSP holds a CCN issued by the commission to provide retail electric
service and operates electric transmission facilities in Texas;
(B) The Interested TSP or its parent company
or controlling shareholder or another company providing a bond guaranty or
corporate commitment to the Interested TSP under subparagraph (E) of this
paragraph must demonstrate an investment-grade credit rating as defined in
subparagraph (E) of this paragraph; or
(C) The Interested TSP must establish that it
has:
(i) assets less any goodwill but
including regulatory assets in excess of liabilities of at least 40% of the
projected total cost of the CTP Facility on its most recent audited financial
statements; and
(ii) the following
minimum financial ratios, adjusted to exclude transition bonds of subsidiaries,
obtained from the Interested TSP's most recent audited financial statements:
(I) funds from operations-to-interest
coverage of 1.5x;
(II) funds from
operations-to-total debt of 10%; and
(III) total debt-to-total capital no greater
than 65%. However, the commission may choose not to require compliance with the
minimum financial ratios if the Interested TSP cannot meet them because of
non-recurring events that are projected to be favorable to ratepayers and the
Interested TSP's long-term operations and financial condition, such as a large
asset addition to its rate base.
(D) Notwithstanding subparagraphs (A) - (C)
of this paragraph, the commission may determine that an Interested TSP is
eligible for selection as a Designated TSP if the Interested TSP provides
evidence satisfactory to the commission that it has the capability to finance
the proposed CTP Facility it proposes to construct, operate, and
maintain.
(E) For an Interested TSP
to establish its investment-grade credit rating, it may rely upon its own
investment-grade credit rating or a bond, guaranty, or corporate commitment of
an investment-grade rated company. The determination of such investment-grade
quality will be based on the credit ratings provided by Standard & Poor's
(S&P), Moody's Investor Services (Moody's), or any other nationally
recognized rating agency. The minimum investment credit ratings that will
satisfy the requirements of this paragraph include "BBB-" for S&P, "Baa3"
for Moody's, or their financial equivalent. If the relied-upon rating agency
suspends or withdraws the investment grade credit rating, the Interested TSP
shall provide alternative financial evidence within ten days of such suspension
or withdrawal.
(F) To the extent an
Interested TSP is an electric utility as defined in PURA §31.002(6) and
relies on an affiliated transmission and distribution utility for credit,
investment, or other financing arrangements, it shall demonstrate that any such
arrangement complies with §
25.272(d)(7) of
this title (relating to Code of Conduct for Electric Utilities and their
Affiliates).
(G) The Interested TSP
shall provide a summary of any history of bankruptcy, dissolution, merger, or
acquisition of the Interested TSP or any predecessors in interest for the
current calendar year and the five calendar years immediately preceding its
filing under this subsection (d)(1) of this section.
(f) Performance of Designated TSP.
(1) If the commission determines that a
Designated TSP has failed to submit a CCN application in compliance with the
order designating it for a CTP Facility, the commission may revoke the
designation awarded to it, and select another entity for the CTP
Facility.
(2) Within six months of
the date the commission grants the CCN for CTP Facilities, the Designated TSP
shall, based on the latest available information, file with the commission the
following information.
(A) The estimated
total cost for each CTP Facility in the following categories:
(i) CCN acquisition;
(ii) ROW and land acquisition;
(iii) engineering and design;
(iv) procurement of material and equipment;
and
(v) construction of
facilities.
(B) An
implementation schedule for each CTP Facility that provides start and
completion dates for the following four major functions:
(i) engineering and design;
(ii) ROW and land acquisition;
(iii) material and equipment procurement;
and
(iv) construction of
facilities. The implementation schedule shall also include the estimated
in-service date of the CTP Facilities.
(3) During implementation of each CTP
Facility, the Designated TSP shall, within 30 days of becoming aware of any
implementation schedule change that is greater than 60 days for the estimated
dates provided pursuant to paragraph (2)(B) of this subsection, file with the
commission a detailed explanation of the reasons for the change.
(4) If the commission determines that the
Designated TSP has failed to comply with the CCN order for the CTP Facility,
the commission may revoke the CCN.
(5) Each Designated TSP shall file an updated
total cost for each of its CTP Facilities requiring a CCN, one year after CCN
approval and annually thereafter until the CTP Facility is placed
in-service.
(g) Filing requirements.
(1) Notwithstanding §
25.174(c)(4) of
this title, the commission may establish and amend a filing schedule for the
submission of CCN applications for CTP Facilities.
(2) A Designated TSP shall use the commission
form entitled "Application for a Certificate of Convenience and Necessity for a
Proposed Transmission Line Pursuant to P.U.C. Subst. R.25.174" when filing a
CCN application for a CTP Facility.
(3) A Designated TSP filing a CCN application
for a CTP Facility shall also file all direct testimony in support of the
application at the time the application is filed.
Disclaimer: These regulations may not be the most recent version. Texas may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
