Current through Reg. 50, No. 13; March 28, 2025
(a) Purpose. The
purpose of this section is to establish the rules, regulations and procedures
by which affected utilities will comply with Public Utility Regulatory Act
(PURA), Chapter 39, Subchapter F relating to Recovery of Stranded Costs Through
Competition Transition Charge, PURA §39.201, relating to Cost of Service
Tariffs and Charges, and PURA, Chapter 39, Subchapter G relating to
Securitization in order to establish a competition transition charge (CTC) as a
non-bypassable charge.
(b)
Application. This section shall apply to all electric utilities as defined in
PURA §31.002 which have stranded costs as described in PURA
§39.251.
(c) Definitions. As
used in this section, the following terms have the following meanings unless
the context clearly indicates otherwise:
(1)
New on-site generation--Electric generation capacity greater than ten megawatts
capable of being lawfully delivered to the site without use of utility
distribution or transmission facilities, which was not, on or before December
31, 1999, either:
(A) A fully operational
facility, or
(B) A project
supported by substantially complete filings for all necessary site-specific
environmental permits under the rules of the Texas Natural Resource
Conservation Commission (TNRCC) in effect at the time of filing.
(2) Eligible generation--Any
electric generation facility that falls into one or more of the following
categories:
(A) A fully operational
qualifying facility that lawfully served a retail customer's load before
September 1, 2001, and for which substantially complete filings were made on or
before December 31, 1999, for all necessary site-specific environmental permits
under the rules of the TNRCC in effect at the time of filing, so long as such
facility serves the same end-user it was serving on September 1,
2001.
(B) An on-site power
production facility with a rated capacity of ten megawatts or less;
(C) Any generation facility that lawfully
served a retail customer's actual load which is capable of lawfully delivering
power to the site without use of utility distribution or transmission
facilities and which is not new on-site generation including but not limited to
facilities described in subparagraphs (A) and (B) of this paragraph, so long as
the facility continues to serve the same end-user or users it was serving on
December 31, 1999 if it was fully operational at that time or the end-user or
users who first took power from the facility when it became operational if it
become operational after December 31, 1999.
(d) Right to recover stranded costs. An
electric utility is allowed to recover all of its net, verifiable, nonmitigable
stranded costs incurred in purchasing power and providing electric generation
service. Recovery of retail stranded costs by an electric utility shall be from
all existing or future retail customers, including the facilities, premises,
and loads of those retail customers, within the utility's geographical
certificated service area as it existed on May 1, 1999. A retail customer may
not avoid stranded cost recovery charges by switching to on-site generation
except as provided by subsection (i) of this section. In multiply certificated
areas, a retail customer may not avoid stranded cost recovery charges by
switching to another electric utility, electric cooperative, or municipally
owned utility after May 1, 1999.
(e) Recovery of stranded cost from wholesale
customers. Nothing in this section shall alter the rights of utilities to
recover wholesale stranded costs from wholesale customers. If the utility
decides not to recover some or all stranded costs from its wholesale customers,
it shall not recover these costs from retail customers through non-bypassable
charges or otherwise.
(f)
Quantification of stranded costs. An electric utility seeking to recover its
stranded costs shall submit the necessary information in compliance with the
unbundled cost of service rate filing package (UCOS-RFP) approved by the
commission.
(g) Recovery of
stranded costs through securitization. An electric utility that seeks to
recover regulatory assets and stranded costs through securitization financing
pursuant to PURA, Chapter 39, Subchapter G shall request a separate competition
transition charge for that purpose.
(1) An
electric utility that seeks to securitize its regulatory assets or stranded
costs pursuant to PURA §39.201(i)(1) shall file an application using the
commission-approved form.
(2) An
electric utility may seek to securitize its regulatory assets under PURA
§39.201(i) any time after September 1, 1999.
(3) An electric utility that seeks to
securitize its stranded costs under PURA §39.201(i) must obtain a
determination by the commission of its revised estimate of stranded costs prior
to submitting its application.
(4)
The amount of regulatory assets eligible for securitization as determined by
the commission in a proceeding pursuant to §39.201(i)(1) shall be
considered in the quantification of stranded costs in subsection (f) of this
section.
(h) Allocation
of stranded costs. Allocation of stranded costs and calculation of CTC per
customer class shall be part of the cost separation proceedings as defined in
§
25.344 of this title (relating to
Cost Separation Proceedings). The utility shall submit information in
accordance with the instructions contained in the UCOS-RFP.
(1) Jurisdictional allocation. Costs shall be
allocated to the Texas retail jurisdiction in accordance with the
jurisdictional allocation methodology used to allocate the costs of the
underlying assets in the electric utility's most recent commission order
addressing rate design.
(2)
Allocation among Texas customer classes. Stranded costs shall be allocated in
the following manner.
(A) Any capital costs
incurred by an electric utility to improve air quality under PURA §39.263
or §39.264 that are included in a utility's invested capital in accordance
with those sections shall be allocated among customer classes as follows: 50%
of those costs shall be allocated in accordance with the methodology used to
allocate the costs of the underlying assets in the electric utility's most
recent commission order addressing rate design; and the remainder shall be
allocated on the basis of the energy consumption of the customer
classes.
(B) All other retail
stranded costs shall be allocated among retail customer classes in the
following manner:
(i) The allocation to the
residential class shall be determined by allocating to all customer classes 50%
of the stranded costs in accordance with the methodology used to allocate the
costs of the underlying assets in the electric utility's most recent commission
order addressing rate design and allocating the remainder of the stranded costs
on the basis of the energy consumption of the classes.
(ii) After the allocation to the residential
class required by clause (i) of this subparagraph has been calculated, the
remaining stranded costs shall be allocated to the remaining customer classes
in accordance with the methodology used to allocate the costs of the underlying
assets in the electric utility's most recent commission order addressing rate
design. Non-firm industrial customers shall be allocated stranded costs equal
to 150% of the amount allocated to that class.
(iii) After the allocation to the residential
class required by clause (i) of this subparagraph and the allocation to the
nonfirm industrial class required by clause (ii) of this subparagraph have been
calculated, the remaining stranded costs shall be allocated to the remaining
customer classes in accordance with the methodology used to allocate the costs
of the underlying assets in the electric utility's most recent commission order
addressing rate design.
(iv)
Notwithstanding any other provision of this section, to the extent that the
total retail stranded costs, including regulatory assets, of investor-owned
utilities exceed $5 billion on a statewide basis, any stranded costs in excess
of $5 billion shall be allocated among retail customer classes in accordance
with the methodology used to allocate the costs of the underlying assets in the
electric utility's most recent commission order addressing rate
design.
(v) The energy consumption
of the customer classes used in subparagraph (A) of this paragraph and clause
(i) of this subparagraph shall be based on the data for the test year ending
May 1, 1999 adjusted only for line losses and weather.
(vi) For the rate classes which were not
treated as a separate class in the utility's last cost of service study, the
generation portion of the base revenues shall be used to develop a demand
allocator. For the rate classes that have been determined as discounted rate
schedules by the commission, the base revenues used to determine the demand
allocator for these rate classes should include imputed revenue.
(i)
Applicability of CTC to customers receiving power from new on-site generation
or eligible generation. A retail customer receiving power from new on-site
generation or eligible generation to serve its internal electrical requirements
may not avoid payment of stranded costs except as provided in this subsection.
A customer's responsibility for payment of stranded costs shall be determined
as follows:
(1) No CTC. An end-user whose
actual load is lawfully served by eligible generation and who does not receive
any electrical service that requires the delivery of power through the
facilities of a transmission and distribution utility is not responsible for
payment of any stranded cost charges.
(2) CTC for eligible generation. A retail
customer whose actual load is lawfully served by eligible generation who also
receives electrical service that requires the delivery of power through the
facilities of a transmission and distribution utility shall be responsible for
payment of stranded cost charges based solely on the services that are actually
provided by the transmission and distribution utility, if any, to the customer
after the eligible generation facility became fully operational, such as
delivery of supplemental, standby, or backup service. Such charges may not
include any costs associated with the service that the customer was receiving
from the electric utility or its affiliated transmission and distribution
utility under their tariffs before the operation of the eligible generation. A
customer who changes the type of service received from the electric utility or
its affiliated transmission and distribution utility after the customer
commences taking energy from eligible generation will pay stranded cost charges
associated with the service it is actually receiving from the transmission and
distribution utility.
(3) CTC for
new on-site generation. A retail customer who commences taking power from new
on-site generation that represents a material reduction in the customer's use
of energy delivered through the utility's facilities shall be responsible for
payment of stranded cost charges that are calculated by multiplying the output
of the new on-site generation utilized to meet the internal electrical
requirements of the customer each month by the sum of the applicable stranded
cost charges in effect for that month. The applicable CTC for such customer
shall be the CTC associated with the service that the customer was receiving
from the electric utility prior to switching to new on-site generation. These
stranded cost charges shall be paid in addition to the stranded cost charges
applicable to energy actually delivered to the customer through the
transmission and distribution utility's facilities. A customer who commences
taking power from new on-site generation that does not represent a material
reduction in the customer's use of energy delivered through the transmission
and distribution utility's facilities shall pay the CTC calculated as set forth
in paragraph (2) of this subsection for that portion of the customer's load
served by the new on-site generation.
(4) Material reduction. For purposes of this
subsection, a material reduction shall be a reduction of 12.5% or more of the
retail customer's use of energy delivered through the utility's transmission
and distribution facilities. The reduction shall be calculated by comparing the
customer's monthly use of energy attributable to new on-site generation to the
customer's average monthly use of energy delivered through the utility's
facilities for the 12-month period immediately preceding the date on which the
customer commenced taking energy from the new on-site generation.
(5) Multiple on-site power production
facilities. A retail customer may designate any number of on-site power
production facilities located on a single site as eligible generation under
subsection (c)(2)(B) of this section as long as the sum of rated capacities of
such facilities does not exceed ten megawatts. Stranded cost charges for any
on-site power production facility with a rated capacity of ten megawatts or
less, not designated as eligible generation under this paragraph, shall be
calculated in accordance with the methodology set forth in paragraph (3) of
this subsection for new-on-site generation that results in a material reduction
in the retail customer's use of energy delivered through the utility's
transmission and distribution facilities. For purposes of determining whether
the installation of multiple on-site power production facilities under this
paragraph has caused a material reduction in the customer's use of energy under
paragraph (4) of this subsection, all of the energy delivered to the customer
from such facilities will be taken into account. A customer may not create
separate entities on a single site for the purpose of gaining exemptions under
this paragraph. A retail customer may change the designation of such an on-site
power production facility:
(A) No sooner than
one year after the facility's initial designation;
(B) No sooner than one year after the
facility's subsequent designation; or
(C) Upon addition or retirement of any such
on-site power production facility being used to serve the customer's
load.
(6) Reporting
requirements. Persons owning or operating new on-site generation or eligible
on-site generation shall submit the information required by §
25.105 of this title (relating to
Registration and Reporting by Power Marketers, Exempt Wholesale Generators, and
Qualifying Facilities). Those persons shall also comply with procedures and
reporting requirements described in the transmission and distribution utility's
tariffs related to the assignment and collection of the CTC from eligible and
new on-site generation and any other commission rule or regulation related to
the implementation of this section.
(7) Adjustment to overall CTC. On and after
January 1, 2005, the commission will periodically review the overall allocation
of the CTC among customers and/or customer classes to incorporate the loss of
contribution due to customers taking advantage of the specific statutorily
granted exceptions under this section and adjust the charges prospectively. To
the extent these are known and measurable at the time of the April 2000 filing,
sufficient information shall be provided by the filing utility to allow for
calculation of the CTC.
(j) Collection and rate design of CTC
charges. These charges shall be billed to a customer's retail electric
provider. The CTC shall recover the amount of stranded costs as defined in
PURA, Chapter 39, Subchapter F that are reasonably projected to exist on the
last day of the freeze period. Utilities shall consolidate existing rate
classes into the minimum number of classes needed to sufficiently recognize
differences in usage of the underlying generation assets. Customers shall be
classified into no fewer than the following classes: Residential, Commercial,
Firm Industrial, Non-firm, and Back-up Service. No customer classes shall be
materially disadvantaged by class consolidation.