(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.
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