Creighton Capacity Rider Bill Fits One Utility Outside ERCOT

The text as introduced · 1,075 words

89R6409 JXC-F

By: Creighton
S.B. No. 1856

A BILL TO BE ENTITLED

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:

(1) an electric utility's recovery of capacity-related

costs and return of capacity-related revenues, which may fluctuate,

should be accomplished as contemporaneously as possible with the

incurrence of those costs and the receipt of those revenues; and

(2) a regulatory authority should presume to be just

and reasonable capacity-related costs incurred or capacity-related

revenues received through an electric utility's participation in a

multi-state auction operated by a regional transmission

organization or independent system organization authorized by the

Federal Energy Regulatory Commission, as well as those costs and

revenues incurred or received under a power purchase agreement

under the jurisdiction of the Federal Energy Regulatory Commission,

and any associated refund or surcharge.

(c) On application by an electric utility, the commission

shall establish a capacity cost recovery rider that can be updated

at least annually and that ensures timely:

(1) recovery of the utility's costs that are eligible

as provided by Subsection (d); and

(2) return of the utility's revenues that are eligible

as provided by Subsection (d).

(d) In this section, eligible costs and revenues include:

(1) 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; and

(2) capacity-related costs and revenues associated

with the utility's participation in power purchase agreements under

the jurisdiction of the Federal Energy Regulatory Commission,

including associated refunds and surcharges ordered by the Federal

Energy Regulatory Commission, to the extent the costs and revenues

are not included in the utility's base rates.

(e) In each base rate proceeding following the

establishment of a capacity cost recovery rider, the regulatory

authority shall adjust the revenue requirement and rates of the

electric utility's capacity cost recovery rider to include all

eligible costs and revenues. The electric utility may not continue

to include eligible costs or revenues in the utility's base rates

unless the utility seeks and the commission approves termination of

the utility's capacity cost recovery rider in a subsequent base

rate proceeding.

(f) The annual revenue requirement and rates for a proposed

capacity cost recovery rider must include:

(1) the electric utility's calculated costs or

revenues for the upcoming year beginning on the June 1 associated

with the utility's participation in a multi-state capacity auction;

(2) the utility's costs or revenues for the upcoming

year beginning on the June 1 associated with any power purchase

agreements under the jurisdiction of the Federal Energy Regulatory

Commission, including any associated refunds or surcharges

required by a Federal Energy Regulatory Commission order issued in

the previous 12-month period; and

(3) 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 previous 12-month period.

(g) The commission shall process an application to

establish or update a capacity cost recovery rider in accordance

with Subsections (h)-(k).

(h) 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.

(i) 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 seventh day after

the date of the utility's filing; and

(2) may address only the mathematical accuracy of the

utility's proposed capacity cost recovery rider revenue

requirement and rates.

(j) An inaccuracy identified under Subsection (i)(2) may be

addressed only in the electric utility's next capacity cost

recovery rider application.

(k) The regulatory authority shall issue an order approving

an electric utility's proposed capacity cost recovery rider not

later than the 10th day after receipt of the utility's application.

The electric utility may begin billing the rates proposed in the

approved application for service rendered after the May 31 after

the application is filed.

SECTION 2. An electric utility to which Section 36.216,

Utilities Code, as added by this Act, applies may file an

application with a regulatory authority 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 Public Utility Commission of Texas has adopted any rules

regarding capacity cost recovery riders. Not later than the 10th

date after the date the application is filed, the regulatory

authority shall issue an order authorizing the electric utility to

begin imposing the rates proposed in the application 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.